There are many different kinds of real estate investment, but most fall neatly into two broad categories: The first category is residential real estate investment, such as housing property and residential real estate loans. The first mostly deals with single family homes and knowing the right time to sell and buy homes. The second category is commercial real estate investment, which includes office buildings, apartment complexes, retail properties, warehouses, shopping centers and the like.
However, there is a third category of real estate investment, called “orphan” real estate investment, because the vast majority of it is not involved in buying and selling physical property. These are the type of deals that can still be considered residential real estate investment depending on where they are made.
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Physical properties and paper properties
These types of transactions, in turn, are grouped into two basic categories. These include “physical” properties and “paper” properties. A physical real estate investment is one in which the investor actually owns the property, while a paper investment is one in which the value of the property is based on some abstract value obtained from a contract or agreement between the buyer and the seller.
Residential real estate investors usually make an effort to get the best deal they can when purchasing residential properties. Buying a home is a big commitment, after all. Hence, investors who are looking for a piece of the action usually go for larger parcels of land with attractive features like schools, shopping centers and amenities like a nearby airport.
In fact, many investors are willing to put up large sums of money to buy residential properties in upscale areas simply because these properties will always have a good value no matter what. Some of the more common types of residential real estate investors include first-time buyers, retired military personnel and people with stable financial histories.
Real estate investors dealing with commercial property have the advantage of purchasing and managing multiple properties. This gives them greater flexibility as far as making investments go. However, the commercial property also has its drawbacks.
One of the worst things you can do when investing in commercial property is to rent out your rental units. This is because it can be hard to recover money from tenants, and you won’t make much money if you don’t have a steady stream of them paying you rent.
Many real estate investors focus their efforts on off-market properties. Off-market properties are those that are not being managed by a professional real estate agent. Sometimes these properties may have been abandoned by owners but are still standing.
Because they’re not managed, off-market properties are often less expensive. They make good investments for someone who has enough money to cover the initial costs of buying and then trying to maintain the property.
To Sum Up
As you can see, there are many types of real estate investments that you can make. If you like to make a lot of money by buying and selling quickly, then you may want to consider becoming a real estate investor. However, you must be patient and make the right investment decisions. Those who do not, can wind up loosing money on a deal.
On the other hand, if you like to have more time to manage your investments and keep an eye on the market, then you may want to consider investing in residential properties. Whatever you decide, there are always options out there that will suit your investing style.