Investing in real estate is a good way to add to your investment portfolio and it’s also a good way to earn passive income. Did you know that investing in different types of properties will add diversity to your portfolio?
So if you’ve invested in a home that you’re renting to tenants, you can take that money and reinvest. There are several different types of properties that you can invest in, and here’s a list of each.
Residential Real Estate
Residential properties are properties in which people live. These can be single-family homes, duplexes, quadruplexes, apartment complexes, condos, and townhomes. Residential real estate is a popular choice for first-time real estate investors.
They’re not as expensive as other types of properties, and it’s fairly easy to make a profit from this type of property because there are currently more people renting homes as opposed to buying them. You just have to know what home renters are looking for when it comes to residential real estate.
The key to ensuring that your residential property investment (and any type of investment property) is successful is to choose a good location. When it comes to residential properties, a good location is a city or town that is projected to see a lot of growth in the future.
This means that there are jobs available in the city. You should also look for a location near a good school district, as families with children are more likely to stay longer if the location is beneficial for their children.
Commercial Real Estate
Commercial properties are places of business, rather than dwelling spaces. These include your typical office buildings, restaurants, hotels, movie theaters, malls, shopping centers, and other stores. Commercial real estate tends to be much more expensive than residential real estate, but you’re more likely to see a steady stream of income and a larger return on your investment.
This is because many commercial properties allow you to have more than one tenant— tenants who are business owners who tend to sign longer contracts. This balances out the fact that property taxes tend to be higher on commercial properties.
Location is also an important factor for the success of commercial properties. Many large cities have a business district, so if you’re investing in an office building a business district would be a prime location.
When it comes to restaurants and shopping centers, you’ll want to find a location in the heart of the city that sees a lot of foot traffic. You could also invest in building a commercial property in an up-and-coming area.
Industrial Real Estate
Industrial real estate is sometimes grouped with commercial real estate, but these buildings are specifically used for manufacturing goods and products, as well as distributing them. Examples of industrial properties include warehouses, distribution centers, factories, and growing facilities.
These types of buildings are typically found in rural areas, or near interstate highways. Although industrial properties only house one tenant, there’s a growing demand for more industrial real estate, especially warehouses.
Vacation Rentals
Vacation rental properties are technically residential properties, but they are considered short-term rentals since they’re rented by multiple tenants throughout the year. Many states in the U.S. have strict rules about vacation rentals, though the general rule is that a tenant cannot rent a vacation rental for more than six months at a time.
Vacation rentals can be in the form of beach houses, villas, cabins, cottages, and even condos for rent. In fact, many people have switched from staying in hotels for a trip to staying in a vacation rental property in order to be in a home-like setting. This is what makes sites like Airbnb and Vrbo so popular.
The type of real estate you decide to invest in is up to you. Decide what your goals are and what is feasible for you in order to make the best decision. Also, remember that it takes time and patience to see success in the real estate industry.
