What comes to mind when you think of real estate investment? Does it conjure images of buying fixer-uppers and flipping houses? While this is a completely acceptable way to dip your toe into the market, most people don’t realize that there are many different types of beneficial real estate investment that go beyond single-family, residential homes. Let’s discuss the three types of real estate investment you can capitalize on, their pros and cons, and how to start investing.
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Types of Real Estate Investment to Consider
1. Multifamily Housing
If you’re looking for types of real estate investment that are like residential properties, multifamily housing is a logical choice. Similar to how you’d put money towards a property made for housing, this type of real estate is considered anything with five or more units attached to it, such as apartments, condos, duplexes, and townhomes. Multifamily housing gives investors the freedom to offer both long-term rentals and short-term stays. Additionally, if you live in one of the units yourself, you’ll be eligible for certain tax and insurance breaks.
Pros: Your rental strategy can be flexible, and you have certain tax and insurance benefits if you live on the property.
Cons: Units and buildings will require a certain amount of upkeep, meaning you’ll need to either have the time and skills to meet their needs or hire someone to do maintenance.
2. Commercial
Commercial real estate is any space that is rented or leased out by a business. While this type of real estate investment has an array of examples—such as gas stations, restaurants, and more—two common subsets of this category include retail and industrial investment. Retail investment refers to properties where goods and services are sold like stores or strip malls. Industrial real estate is where products are made and stored, such as warehouses or factories. Although it may take some time, the best part of any of these commercial choices is that the more the business is successful, the faster your land will appreciate in value.
Pros: There’s an opportunity for a high yield return on your investment. Additionally, property maintenance may be more hands-off than other options when dealing with a business.
Cons: Commercial investments can be expensive and take time, especially if you’re dealing with multiple leases. There also tends to be more risk involved due to issues concerning injuries or property damage.
3. Raw Land
When we think of different types of real estate investment, we sometimes overlook the value that simple, untouched land can offer. Void of any buildings, pathways, or even crops, raw land is a blank canvas that can be very attractive to a variety of interested parties. Consider leasing it to farmers for their crops or livestock; or alternatively, hold onto the property for a while and then sell it to a developer for an appreciated value. According to Rocket Mortgage, this investment is an option because you can use a land loan to purchase raw land, especially if you go the development route.
Pros: Raw land is often a less expensive investment compared to built upon properties. They’re also easier to maintain since it requires no building maintenance.
Cons: Land can take a long time to appreciate if you hold it, and there are very few tax advantages to raw land. Zoning approval can also be difficult to obtain if you have plans to develop on it.
Getting Started in Real Estate Investment
If you’re curious about joining the world of real estate, it can be overwhelming to consider all the different types of real estate investment at your disposal. One thing is for certain. No matter which real estate purchase you choose, title insurance is always highly recommended. Millennial Title offers a professional voice to assist you with understanding the complexities of real estate investing and what option is best for you. When you’re ready to dive into real estate, we’ll ensure your investments remain protected. Contact the experienced staff at Millennial Title today to learn more about your investment options.
