Real estate is among the most widespread and ancient industries. Many investors have limited information, and only a few are familiar with the types of real estate they can invest in.
In your quest for passive income and financial independence, knowing several types of real estate properties is important so you can diversify your investment portfolio. Good examples of real estate assets that experts at LandProz Real Estate LLC have suggested you can buy are:
1. Residential Properties
Residential properties are probably the most widely understood and known real estate investment type. With that said, you might or might not be familiar with different kinds of residential properties, from ADUs (accessory dwelling units) to micro-flipping.
Residential properties are also active. That means they require labor contributions and significant monetary contributions from an investor. But they can bring in continuous cash flow and sizable profits. Other types of residential properties may include:
- Vacation rental
- Long-term properties
Undoubtedly, buying land can be a good investment. Although most real estate investors look for their next investment property or home to rent out, buying vacant land comes with a lot of benefits.
In addition to lowered purchase prices compared to commercial properties, buying vacant land from a reliable farm real estate company in Juneau County, is flexible in what you may do with it. Whether you want to sell, wait, or develop, the decision is yours to make.
3. Commercial Properties
A commercial property can be an existing business building or empty land allocated for commercial purposes. Valuation of commercial properties needs more complex accounting methods, including cash flow, historical revenue, and income potential of properties.
Without extensive experience in business valuation, it would be best to carefully enter this specialization after building enough experience in it.
Different forms of commercial properties, like supermarkets, gas stations, industrial buildings, and office premises, are complex. But their income is better if you invest wisely.
4. Industrial Properties
These properties include assets meant for research & development, distribution, manufacturing, storage, and production.
Every city or state has a specific designated area for industrial assets. Zoning maps often display those areas to ensure activities don’t disrupt businesses or residencies.
Industrial properties can be regarded as a sub-category of commercial properties. But there are several differences between these two. One notable difference is that many commercial real estate properties involve investors interacting with the public, like clients and customers.
REITs (Real Estate Investment Trusts) own or manage commercial real estate properties, which produce income. You can make investments with REIT companies through mutual funds or exchange-traded funds.
REITs are among the few properties performing exceptionally in the market. This, in turn, guarantees better ROI. In addition, you may choose different forms of REITs to diversify your portfolio better. These include the following:
These assets combine different types of real estate properties into one project. A good example is when an investor takes several million shillings in savings and then approaches a bank for funding and builds a mixed-use four-story office building, which a few retail stores surround.
A mixed-use investment is popular for people with significant properties since they can diversify. This is crucial if you want to control investment risks.
In a Nutshell
As an investor in real estate, knowing which kind of property suits you and your needs would be best. Remember that not all real estate markets are good for all forms of property.
This is why most individuals start by investing in land and residential properties. Then, after gaining experience, they invest in REITs and commercial properties.
Angela Spearman is a journalist at EzineMark who enjoys writing about the latest trending technology and business news.