Real estate has long been one of the most intriguing options for investors. It offers a solid, tangible asset and the potential for serious profits. With its ability to provide an income in addition to accruing value over time, a real estate property is naturally attractive to an investor. It is important to recognize, however, just how many types of real estate investments exist, each with their own potential risks and benefits. Listed below are four of the principal categories into which real estate investments can be divided.
When people speak of commercial properties, they are generally referring to office buildings. The owner of such a building would typically lease the space to companies to use for their offices. One benefit of a commercial property is that leases often last for multiple years, meaning the income from the rent is guaranteed for a longer term. The problem with these longer leases is that it is impossible to take advantage of a sudden increase in general rental rates if the owner is trapped in a long-term lease at a lower rate.
Residential properties are those in which a person lives, including houses, apartments, and vacation homes. Rental agreements typically last a year, but a property owner can negotiate different terms if they wish. The monthly income is of course nice, but the owner must also worry about any damage a tenant might do to a property.
Industrial properties are those that house a money-making venture, like a car wash or warehouse. They often offer additional revenue streams for the owner through fees or the installation of additional services onsite.
In retail properties, a store sells products to customers on the premises. They include strip malls, normal storefronts, or shopping centers. The owners typically charge a monthly rent, although a portion of the store’s sales can also be negotiated.
Real estate can be an excellent investment, but not all investment properties are the same. From a simple beach house to a massive skyscraper or a gargantuan mall, there are countless ways to make money from real estate. By investigating the various types of real estate options, a new investor can decide which category of property suites them.