Real estate investing can make for a very lucrative career. However, many people don’t realize that there are different types of real estate that you can invest in, and that they can be very different from one another. Each come with their own set of pros and cons, too, when it comes to making a deal. Some may be very profitable, while others may not be. Here are a couple of different types of real estate investments that you can make, should you choose to endeavor.
Residential real estate includes apartments, houses, town houses, or condominiums. In this type of investment, there will be tenants involved. Tenant stay is determined by the length of a lease, which the owner/landlord chooses. Generally, though, a lease period is at least six months, but usually at least one year. Some owners will allow a tenant to live at the property on a monthly basis, but again, it is all up to the discretion of the landlord.
The next type of real estate is commercial. Commercial real estate can be described as that of buildings. Leases on buildings are longer than that of residential properties; generally, at least three years. Building leases can be tricky in terms of whether or not they will end up being an investment to the owner. For example, it is all determined by the rental market at the time of lease. While this is true when it comes to rental properties as well, building leases are longer. As such, if the building is rented when the market is low, the owner is going to lose money that they could have been making over the next few years if the rental rates go up. On the other hand, it can also work the opposite way. They can rent the building at a popular time, and lock in a hefty rate for a few years. It is all dependent on the current market.
The next type of investment is industrial. Industrial properties include real estate that makes sales on a temporary basis, such as a car-wash facility or a warehouse. Finally, we have retail properties. These can range from shopping centers, to strip malls, or any other retail fronts. Most of the time, the owner will receive a certain amount of the profit that the tenant makes from their sales.
Either way, you must be smart when choosing which real estate properties to invest in. Some may bring in larger profits than others. Always speak with industry professionals, and check out comps to get an idea as to whether or not the property will be beneficial to you.