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Investment Beginner: 4 Types of Real Estate Investments

If you’ve ever been interested in real estate look no further!

Real estate is a complicated industry that involves buying, selling, and renting property. Many people get interested in real estate when they realize that there’s a lot of money to be made.

However, like investing in anything, investing in real estate comes with a lot of risks because you typically have to spend several hundreds of thousands of dollars. Anyone can get started in real estate, but you must be aware of the several types of real estate investments.

Here are some of the most common real estate investment types!

1. Invest in a Large Real Estate Deal

One of the most effective types of real estate investments is joining with others to invest in a large deal. This can be done with both commercial and residential property.

There are 2 main benefits of investing in a large real estate deal:

  1. Low minimums – when it comes to property, you can invest as little as you’d like while still being an owner. 
  2. You don’t have to be an accredited investor – in the past, investors that wanted to buy a property with others had to become an accredited investor. Today, many investment types don’t require accredited investors.

Anyone looking to start investing should look into real estate companies. You can start by checking out ones like Property Manager Insider to learn about some of the biggest ones.

2. Buy a Rental Property

Rental properties are some of the common real estate investment types that many people are interested in. The idea behind investing in rental property is that you can earn a passive income by renting it to others. 

Similar to large real estate deals, rental property can come in the form of both a commercial or residential building.

If you were to buy a large office, you could rent out several spaces for companies. Smaller companies typically do this when they’re trying to save as much money as possible, so this investment type is reliable providing that you’re in a popular area.

Houses and apartments are also rented often and can be much more reliable than a commercial building because people are actively looking for a place to stay at all times. 

The major downside to buying a rental property is that you’ll have to pay a lot of cash upfront. After your downpayment, you’ll have to worry about maintenance fees to keep the place running. Because of this, you’ll need to calculate whether you’d make a good return on a rental property before buying it.

Rental properties also require you to deal with tenants, which can be aggravating for anyone that’d like to buy a property and forget about it.

If you’re renting out a house, you’ll be responsible for fixing things and ensuring the place looks nice for residents.

Renting out a commercial building gives you a bit more freedom if you’re renting it to one company because you can make them responsible for maintenance. This can also be down with a residential property, but you’d be less likely to get a tenant.

3. Buy and Sell Houses

When people talk about the best practices for real estate investing, many will claim that flipping houses is the best method because there’s a lot of room for profit.

While buying and selling houses allows some people to win big, you’ll have to research the market in which you’d like to buy one. If you buy a house during a down season, you’ll have a hard time selling it.

Buying and selling houses typically requires you to look for a cheap house, repair it and make upgrades, and then list it at higher market value.

Without the research, you won’t know how much the house will sell for or what you can do to raise its value.

The best way to flip a house is to buy one that doesn’t need a lot of repairs because you won’t have to invest much money into it. If it needs a few cosmetic repairs, you won’t have to invest much to do the repairs and will significantly increase the likelihood that someone buys it.

4. Rent a Portion of Your Home

Anyone that already owns a home and isn’t prepared to invest in another property can start renting out part of their home to get an understanding of how the business works.

Sites like AirBnb have become increasingly popular because they allow individuals to rent out rooms and entire homes at a much more affordable rate compared to hotels.

As a homeowner, you can rent out a spare room while earning hundreds or thousands a month. If you’re in a highly popular area, you could rent out the entire home to further increase your profits while you look into other properties.

Start Looking Into Several Types of Real Estate Investments Today

To invest effectively, you’ll need to build a portfolio with several types of real estate investments that allow you to continuously earn a passive income. Anyone new to real estate can get started by researching their local market and learning about what buyers are seeking.

If you’re new to investing, we encourage you to consider starting with something like AirBnb. Investing in an entire property is risky, especially if you don’t know much about real estate. Renting out a single room doesn’t come with many risks and you can still earn a lot of money each month.

Browse our articles if you’d like to learn more about real estate investments!