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Types of Real Estate to Invest In

Updated on March 8, 2018

REAL ESTATE INVESTING

In order to achieve financial independence, the key is to build wealth by acquiring assets and establishing an unearned income that allows you to support your lifestyle. One of the best ways to build wealth and establish a passive income is to invest in real estate. Whenever anyone looks to invest in real estate, they will have a number of options to consider and evaluate. These options often include single family houses, distressed properties, apartment buildings and commercial office buildings. Investing in any one of these types of properties will ensure that individuals will be in great position to build a portfolio which can allow them to achieve financial independence.

Before investing in real estate, it is important to know your goals and the types of property you want to acquire. It will also depend on the amount of capital you have as well. As a result, it is vital that you assess your finance and credit as well as your goals before investing in real estate. However, investing in various types of real estate will provide you with lots of benefits that will greatly enhance your financial situation. Therefore, acquiring property to invest in should become a top priority if you are serious about building wealth in the near future.

SINGLE FAMILY HOUSES

The first type of property that you can invest in is a single family house. This is quite simply a single family home that people can live in. With a single family home you can use a variety of strategies in order to prosper. First you can buy and hold the property and wait for it to appreciate in value. After a number of years, you can sell the house for a high profit and then move on to your next deal. While waiting for the home to appreciate, you can rent it out and earn a monthly income during this time. The monthly income can help give you funds to help work towards financial independence. As a result, investing in single family homes is one of the most effective ways to benefit from real estate investing.

MULTI FAMILY PROPERTIES

Another type of property that you can invest in is multi family properties. These include duplexes, triplexes and fourplexes. With multi family properties, you can earn a rental income that is higher than that of a rental house. Since these properties have multiple units, you can still earn positive cash flow even with a vacancy. Multi family properties usually cost more to acquire and finance, but they can often result in much higher appreciation and profits in the future. Investing in multi family properties is usually the next step after investing in single family houses. By investing in multi family properties, you will also be in position to get some additional experience in managing rental properties and prepare you for investing in larger properties in the apartment and commercial real estate sectors.

APARTMENT BUILDINGS

When it comes to investing in real estate, one of the very best types of properties that you can invest in is apartment buildings. These types of properties are large structures that have anywhere from 20 to 100 units of housing. As a result, there will be lots of units to rent out and provide you with revenue. By investing in an apartment complex, you will have the opportunity to earn very high cash flow which can at times replace an entire year’s salary. Therefore, apartment buildings can be a great way to establish financial independence. While apartments can be very lucrative, they are among the most costly types of properties to acquire due to their high price. They will also require you to be proficient at property management or hire a company that can do that for you. However, with good management, an apartment complex will likely provide you with a great income as well as a very high profit when and if you want to sell it. As a result, apartment buildings are yet another great type of real estate to invest in.

COMMERCIAL OFFICE BUILDINGS

Residential real estate is the most common type of real estate to invest in. However, there are still other types of real estate to invest in that can be very lucrative and lead to financial independence. This type of real estate is known as commercial real estate. With this kind of real estate, investors can purchase and own office buildings. When investing in a commercial building, you will acquire a property that will allow companies to rent out space and provide you with a rental income. Since rents for commercial properties are higher than apartments, this can provide investors with excellent cash flow. Similar to apartment complexes, investors will usually need to come up with substantial capital in order to get the building and then finance it for a period of time. However, commercial office buildings provide a high rental income as well as the potential to earn a very high profit when and if it is sold. Therefore, investing in commercial buildings will greatly benefit any investor who is looking to acquire real estate.

DISTRESSED PROPERTIES

As well as residential and commercial real estate, investors who are looking to get property can also benefit by acquiring distressed properties. These are usually single family houses that are either foreclosures, real estate owned properties and fixer upper houses. All three of these types or properties can provide investors with both cash flow and high profits. In fact, investing in distressed properties can often be a great starting point for anyone that is looking to invest in real estate as they are usually the cheapest to acquire and can allow you to make progress towards building wealth.

Fixer Upper

The first type of distressed property that investors can acquire is the fixer upper. This is usually a run down house that needs lots of repairs and replacements. Properties such as this will usually be among the lowest priced homes on the market. As a result, you can easily get a property and work towards making it more valuable. An ideal strategy to use with these types of properties is to get them fixed up and remodeled. After this is completed, you can then rent out the property for more appreciation and then sell it. By following this strategy, investors can be in great position to earn a rental income and well as a very high substantial profit within a couple of years.

Foreclosure

Investors that are looking to acquire distressed properties will also benefit by investing in foreclosures. A foreclosure is a home that is available on the marked due to the current owner not making their payments current on the loan. The property is in the process of being sold at an auction unless the owner can get up to date on the loan. Since the owner is in financial distress and dealing with the possibility of losing their home, investors will need to be sympathetic and sensitivity when looking to make this kind of transaction. They will also need to look for a solution that mutually benefits the current owner and themselves. However, with a foreclosure, you can get a property at a low price and then make some improvements to increase its value. You can rent it out to the current owner or to another tenant for rental income. Investors can also sell this property for a profit as well.

Real Estate Owned

Another distressed property that can benefit investors is real estate owned homes. These are properties that are currently owned by a bank or financial institution that repossessed the home due to foreclosure. Like both foreclosures and fixer uppers, these homes are among the lowest priced homes on the market and can allow investors to get started in real estate investing. Anyone that is looking to invest in a real estate owned property will have to purchase it for the asking price and then manage it like a regular single family home. A good strategy with real estate owned properties is to remodel them for more value, rent them and sell them within a couple of years. Real estate owned properties can therefore be quite lucrative for many real estate investors.

CONCLUSION

Investing in real estate is one of the surest ways to building wealth and establishing financial independence. In order to invest in real estate, you will need to find out which types of properties that you are interested in acquiring. Fortunately for investors, there are many types of properties that they can acquire in order to build a portfolio. With options such as single family homes, four plexes, office buildings, fixer uppers and apartment complexes, investors will have numerous ways to reach their financial goals. By taking advantage of these options, investors will be in great position to improve their financial situation and establish the financial security that they seek.

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