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Four Types of Real Estate Investments You Need to Know

Two Venice Investors Discussing a Project in Front of a City SkylineIf you are starting to invest in Venice rental real estate, you might have seen that there are many options out there. Rental property investors, mainly, have a lot of choices with regards to property type, size, and function. If you’re undecided which type of rental property is best for you, begin by determining the four main types of real estate and the purpose of each one. At that time, narrow down your options until you track down the kind of rental real estate that fits your needs and goals.

Residential

Most new real estate investors contemplating a purchase choose a residential rental property. Unquestionably, there may be a valid justification for this: the residential real estate market is massive! In 2020, it was valued at $33.6 trillion and still expanding. By definition, residential real estate is purchased and occupied as a dwelling by owners or tenants.

Within this broad category of real estate, there are a variety of kinds of residential properties: townhomes, duplexes, multi-family buildings, single-family residences, etc. Thanks to lifestyle and renter demographic changes, single-family rental properties have been in high demand for years. This makes investing in single-family properties one of the most prevalent options for new investors.

Commercial

In contrast, commercial real estate is property used only as a workspace or to conduct a business or trade. As with residential properties, there are several different kinds of commercial properties. Office space, retailers, restaurants, hotels and resorts, and even healthcare facilities all fall under the category of commercial real estate.

There are several advantages of investing in commercial real estate, as it tends to be truly beneficial for some investors. Nonetheless, the initial cost of a commercial property is probably to be much higher than a residential property, which can be a tough problem for first-time investors to conquer.

Industrial

Although technically part of the commercial real estate category, industrial real estate is an extraordinary kind of real estate often designated for use in very specific ways. Samples of industrial real estate incorporate car manufacturers, storage and distribution centers, food processing centers, power plants, and research and development parks.

There are also three different classes of industrial real estate – A, B, and C – so it’s critical to do your research if you are considering investing. Leases on industrial properties can be extremely rewarding and tend to be very long-term holdings. Also, similar to commercial real estate, it can be very costly to acquire industrial property, mainly if such properties are highly popular.

Land

The fourth and final type of investment property you should learn about is a land investment. In most cases, raw or vacant land is purchased with the intent to develop it in some way or to use the natural resources on or under the land for profit.

For numerous investors who own land, this would include offering leases that allow tenants to harvest minerals or water, oil or mining, timberland, orchards, or to use as farms, ranches, and recreational activities. Owning raw land, specifically, is a highly speculative investment that conveys an equally high degree of risk. But in the right conditions, leasing land can be a successful investment for a real estate investor.

With such countless different choices accessible, most real estate investors will specialize in one type or sub-category of real estate. This can be incredibly beneficial when you are just beginning since it takes time to master everything you need to understand about investing in each type of real estate.

 

If you are ready to start investing in residential rental properties, we can help! Our local Venice property management experts work with investors like you to help find, prep and lease quality residential rental homes. Contact us today to learn more.

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