6 Types Of Real Estate Investment – Investors Guide
If you still can’t find a way to diversify your investment portfolio, real estate offers profitable options with various advantages that you may not yet know about, in this article you will know the 6 types of real estate investment you can opt for.
Real estate investment is no longer limited to buying houses or apartments for rent. Today, there are different ways to invest in real estate with advantages and disadvantages that you should know.
It is true that location is a key element in determining the viability of a property, however, there are other factors that can give us the desired capital gain:
- Population growth: if the property is in an area in demographic expansion, migration, etc.
- Socioeconomic level: if the area in question is sought after by a market with high or medium purchasing power.
- Nearby places: the development of the area in question of new places such as squares, parks, entertainment centers, hospitals, etc.
- Age distribution: whether the people moving to the area are of productive age.
Taking these factors into account, let’s talk a little about each type of real estate investment.
6 Types Of Real Estate Investment
1. Investment in offices
Office premises offer a more profitable demand, rental contracts can be established for more than one year and it is an emerging market that is beginning to gain strength in some cities with stable economic development.
Although it has high profitability, it is an investment that depends on the growth of the area and its economic development. In addition to the above, the low demand for this type of property makes it more difficult to rent and, like residential lots, requires a constant maintenance investment.
2. Investment in parking spaces
The growth of the vehicle fleet in many cities is an incentive for this type of investment, especially in areas with restricted places such as school areas or historic centers.
The advantages are many, little maintenance, and high demand for spaces. However, perhaps the hardest part is finding profitable land in a tourist area or high commercial value.
Although maintenance expenses may be few, they do involve management, surveillance, feather equipment, employees for different shifts, etc.
3. Investment in House Flipping
In this modality, an investor – which could be you – buys a house at auction, remodels it, and sells it at a considerably higher price.
It is a profitable investment, if you have management time, find offers with opportunities, calculate the initial purchase and make a checklist of the maintenance costs that arise.
A bad decision for the purchase of a property can cost a lot and without a doubt, if you do not find the means to carry out economic maintenance, the need to resort to experts can reduce the profitability of the investment.
4. Investment in Commercial Premises
Taking into account the points that we mentioned at the beginning, commercial premises can be a profitable investment in the long term since it is relatively easy to find interesting businesses.
On the other hand, maintenance costs will eventually be necessary, in addition to depending on the success or failure of the establishments that are installed on your premises.
Also, many commercial zones in areas of great economic development are reaching exorbitant prices only accessible to investors with high perceptions or considerable capital to invest.
5. Infrastructure and Real Estate Trusts
These are trusts that are listed on the Stock Exchange and are responsible for acquiring real estate for lease and generating profits for the owners.
In it, the owners of the assets contribute certain amounts to the trust, which is responsible for expanding the portfolio of assets. When an investor needs liquidity, he can sell his stake in the stock market.
It is a novel instrument, although its novelty is a risk since by capturing the interest of investors, the price per share has been increasing in the last decade.
6. Residential Lands
It is about buying lands that have all the services so that later you can choose between the following options:
- Build a house to inhabit it (Heritage)
- Build a house and put it up for rent (Investment)
- Resell the land within a certain period
In most parts of the world, residential land is becoming more and more accessible and has high profitability. An area with high economic growth can achieve up to 30% annual yield by just buying one lot, now imagine two or more.
Property never loses its value and it is easy to start investing with relatively small capital without the need for a bank loan. However, it is necessary to approach real estate agencies that offer you the greatest legal certainty and have experience in taking care of your investment.
These same real estate companies must have growth plans and information on the investments to be made in the area.
If you want support on the types of real estate investment and methods of diversifying your business, consider seeking specialized advice that offers you the best dividends on your investment.
