There are many investment forms, from stocks to gold to currency to mutual funds, and even newer forms such as cryptocurrency mining. However, one thing that remains popular regardless of the era is real estate investment. Its popularity lies in the fact that as long as humans exist, we will need a space to make our own. It can either be for business or shelter; investing in real estate will always be a good option.
Even real estate in itself has many different kinds that warrant attention on each. The different types are widely varied and usually follow different rules. If you have any interest in real estate investments, it’s best to familiarize yourself with the different kinds of real estate. This article will look at the different types and what’s best for you depending on your situation.
Commercial Real Estate
Any form of property used for businesses such as offices, restaurants, clinics, or even hotels falls under the commercial form of real estate investment. Leasing or selling commercial properties are among the most popular types of investments, and for a good reason. Commercial properties can be relatively more expensive compared to other forms of real estate investments, often involving business-to-business transactions instead of individuals. This makes it appealing due to high projected income, but with a larger initial capital, it’s not exactly wise for newer investors.
If your property is located in a commercial zone or you have the means to purchase a commercial property, it’s a good idea to get into commercial real estate. However, if you’re starting, it’s better to study this type first.
Residential Real Estate
Any property used for living or shelter purposes falls under residential real estate. This is one of the most popular forms of investment, as residential real estate prices increase consistently throughout the years. After all, the world’s population is always increasing, and with it comes the need for housing. We, as humans, require shelter and residential real estate answers that need.
Condominiums, apartments, single or multi-family homes are all sub-types of residential real estate. What you can build on your property depends on what’s allowed by the local government, but with a guarantee of at least one renter, it has become one of the most common forms of real estate investment. Properties in residential zone make for great investments, and purchasing an apartment to rent it out is a common strategy.
Agricultural Real Estate
Just as its name suggests, agricultural real estate involves the usage of land for growing produce, crops, and even animal husbandry. Zoning restrictions limit what property can be used for agricultural real estate, but if your area allows it, land for agricultural use is also a good investment.
Maintaining a farm requires a certain skill set, which also limits who can profit from it. However, investors can now purchase agricultural areas and have a professional handle the day-to-day work and operations. This also allows the investor to utilize what natural resource is found on their property and let a professional utilize it.
Industrial Real Estate
Factories, warehouses, and any plot of land dedicated to manufacturing and industrial use fall under industrial real estate. Though a relatively uncommon form of investment, industrial real estate holds the largest profit potential as the bigger your property is, the higher the price is. Most industrial real estate involves leasing a plot of land for a factory, or warehouse of goods and other materials, making size the important factor.
If your property is of a relatively large size, industrial real estate is a good way to maximize the potential income per square meter. Although it’s not highly suggested for newcomers to the real estate industry, it still makes a good option if you ever want to take investments seriously.
Cover Your Bases First
One of the commonly overlooked aspects of real estate investment is insurance. In the event of an accident, you want to have your bases covered, and the best protection for that is insurance. Insurance itself has different types, and it would do you well to be familiar with them. Coverage for hazards such as fires and floods, E&O insurance, loss of income insurance, and many more- these are all necessary for your real estate investment to succeed.
Don’t Stop Studying
As with many things, you need to research and study before you commit to a decision. Real estate investments may sound lucrative, but making a decision based on trend and not on facts will only lead to failure and frustrations. So get to researching to protect yourself and your investments.
