Many people know that real estate is one of the most popular ways to earn income, but they don’t know exactly how many different types of investments there are. They are all different with their own pros and cons. What’s great about this is that a person might be great at investing and managing a particular type of investment, while not being very good at all managing another. If you try to invest in one particular area of real estate and have no luck, don’t give up. Try another. Here are a couple of the types of real estate investments that you can make.
The most commonly known type of real estate investments are residential. These include homes, apartments, or town homes, where a person or family pays you to live in the property. The length of their stay is based on the lease. Most residential leases require at least 6-12 months, though some landlords are more lenient and allow month-to-month cases.
Another type of real estate investment is commercial. This type of real estate includes buildings. Building leases typically require at least a few years’ lease. Commercial real estate investment usually pays off fairly well, because it has a higher cash flow stability. If the rental rates are skyrocketing in 2016, for example, but go down within the next few years, the tenant is still paying that owner for the 2016 rate for the next few years. On top of the fact that the owner doesn’t have to worry about the building, or building unit being vacant. On the other hand, if the rental rates were low at the time then skyrocketed, the owner is missing out on what could have been.
The next type of investment is industrial. It includes any real estate that makes sales from customers who use the facility on a temporary basis; for example, a car wash, a warehouse, or a storage unit.
Retail real estate investments include shopping centers, strip malls, and any other retail storefronts. There are some cases in which the landlord can also receive a certain sales percentage from the tenant.
No matter what you do, always be sure that you talk to a real estate attorney before investing in a property. Sometimes investing might require a partner. Before you decide to get one, be sure that you two have the same goals. Lastly, never get into a real estate deal without an exit strategy. Good luck!