What Are the Different Types of Real Estate Investments?

Real estate is becoming a more attractive investment opportunity for young entrepreneurs across the country, and for good reason. On average, long-term real estate investments outperform the S&P 500 Index.

But if you're interested in property investment, where do you even start?

Well, first you need to understand the different types of real estate investments. Keep reading to learn more!

Residential

Residential real estate is the most popular type of investment, especially for beginner investors. This is because it requires very little effort to own and manage a residential property compared to a commercial or industrial property. This is especially true if you work with a property management company that will handle things like tenants, collecting rent, maintenance, repairs, and quickly filling vacancies.

There are a few different types of residential investment options, including:

  • Single-family homes
  • Duplexes
  • Townhomes
  • Condos
  • Apartment buildings

For beginner investors, it's best to start with a single-family home, as you won't have to worry about managing multiple units or tenants. You can also get a huge return by finding homes for sale with the potential for high long-term appreciation.

Commercial

Commercial real estate refers to properties that are leased to businesses. Commercial investments are vastly different than residential investments and offer a wide range of options.

Commercial investments can vary widely in terms of size, cost, and style. Here are some of the types of commercial investment properties.

  • Office Buildings (for small or large businesses)
  • Retail (strip malls, shopping centers)
  • Mixed-use properties (used for both business and residential)
  • Industrial (warehouses, car washes, storage facilities)

In general, commercial properties are a lot more expensive than residential properties. You also might have more difficulty filling vacancies than you would with single-family homes. That's why commercial property investing isn't recommended for beginner investors. It's best to hold off on this type of investing until you have plenty of experience and have had time to build your portfolio.

Undeveloped Land

Investing in raw, undeveloped land can be a low-risk, high-reward opportunity. The goal of investing in land is to find an area that is low in value now, but you expect to grow in value over time. 

For example, is there an up-and-coming town or city with a ton of free land surrounding it? That might be a good investment. In fact, you might be able to make a fortune off of it.

However, there's always the chance that you invest in land that doesn't gain value, and you won't get any return on it. 

This makes investing in undeveloped land a bigger risk than investing in a single-family home. A single-family home will appreciate in value simply due to inflation and the growth of the real estate market. But you can find bare pieces of land that are priced the same now as they were 10 years ago. 

With this type of investment, it's best to only make your move if you feel confident that you've found a unique and up-and-coming area.

Types of Real Estate Investments: Start with Residential Investing

While each of these types of real estate investments may have piqued your interest, it's best to start with residential investing. Not only is it the easiest route, but you'll be able to gain experience and build your portfolio so you can invest in other types of real estate in the future.

Whether you're looking to invest in your first property, or you're a seasoned investor, you need an experienced real estate management team on your side.

Here at Professional Real Estate Management and Investment Services Inc, we will help you find the best properties to invest in, and we'll take care of all of the managerial duties including finding quality tenants, collecting rent, and routine maintenance. 

Contact us today to learn more about how we can help you with all of your residential real estate investing needs!

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