Types of Real Estate Property Investments
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Real estate property investments are becoming popular among investors and other people finding new ways to generate passive income and get financial independence. Although other investments like stocks, mutual funds, exchange-traded funds, and bonds also give better returns, some people, especially beginning investors, still shy away from them because they're a bit volatile and risky. Going for the different types of real estate property investments is an excellent strategy that's both lucrative and satisfying.
Why invest in real estate properties?
Anyone can invest in real estate properties provided they research and prepare themselves well. This is possible due to the rise of home loans that require a small down payment. There are reasons to invest in real estate properties, as follows:
- Real estate values normally appreciate with time- Steady cash flow
- Long-term security
- Real estate property investments have tax advantages
- It's easy to leverage your equity
- Helps build capital
- Protection against inflation
Types of real estate property investments
There are various real estate property investments options that you can consider choosing as follows:
1. Residential properties
These are the most common real estate property investments that people consider in the industry. Residential properties require significant resources in terms of capital and labor. In turn, they also bring continuous cash flow and relatively sizable profits if well managed. Residential real estate investments are further classified into the following:
- Vacation rental properties
- Long-term rental properties
- Flipping houses
- Micro-flipping
2. Industrial properties
These are properties mostly leased to companies such as warehouses, car washes, short or long-term storage units, etc. These properties are usually capital-intensive, although they still generate a lot of money.
3. Commercial properties
These refer to investment properties made for commercial purposes only. They mostly contain office buildings and rental spaces for small businesses and companies. Commercial property owners earn rental income every month.
4. Retail properties
These include strip malls, shopping malls, and retail storefronts that people rent to conduct various revenue-generating activities. Landlords usually get a certain percentage of the sales generated plus base rent to ensure the property stays in good condition.
5. Mixed use properties
They're becoming a popular option among real estate investors. These properties usually consist of two or more categories of properties, including residential, commercial, industrial, or retail properties. Mixed use properties promote diversification which helps control risk.
In conclusion, these are the top types of real estate property investments. Before investing in the real estate market, you should research intensively about the industry and work with a realtor.