Types of Real Estate Investments you Should Know

Are you looking forward to investing some money in real estate and don’t know where to begin? With the harsh economic times we are facing, everyone is probably looking for an alternative for a reliable source of income. Real estate is such a wide industry, and there are different types of investments you may venture into. If you are interested in investing in residential properties, you may want to check and other similar platforms. There are also platforms that can help you find the best investments such as Privy that provide real estate investment software.

Some types of real estate do not require you to own any property. That means real estate investments fall into two main categories, and in this article, we explore these two main categories. Here are the five types of real estate you should know if you are looking forward to investing.

1. Real Estate Investment Trusts (REITs)


These companies own commercial real estate properties like malls, hotels, and office apartments. Most of them are listed in the stock exchange, and you can invest in them through shares.

When you buy shares from these companies, you are simply investing in the properties they own. REITs have a relatively low risk, which makes them more attractive to first-time investors.

Since these investments are required by law to return at least percent of their taxable income to their shareholders, when you buy shares with these companies, you are assured some significant dividends at the end of their financial year.

Another advantage of REITs is that they are highly liquid. Meaning, you can simply sell off your shares in the stock exchange market if you feel like you need some instant cash. However, to invest in REITs, you must have an active brokerage account.

2. Residential Real Estate


Residential real estate is probably the most prevalent type of investment in the industry. Ideally, anywhere that you see people living like apartments, condos, vacation homes, and single-family homes, make part of residential real estate.

When you invest in residential real estate, you will be collecting money in the form of rents from tenants. Investing your money in real estate investment may take many forms, such as buying and selling a house for some profit or simply renting a room in your home.

Here are some types of residential real estate you can invest in this year:

  • Section 8 rentals: These are the typical single-family rentals where the tenants have low or no income. The government pays full or part of the rent. These properties can help raise extra income that you can use to repay your bills. You can check an example on RentKidz.
  • Vacation rental: Are single-family homes that are fully furnished. They are mostly located in high-end areas such as close to beaches, entertainment districts, museums, and lakes. Vacation rental properties are a gold-mine when it comes to generating additional income.
  • Single-family rentals: They are the most common types of residential real estate investment because they require little capital. Examples include townhomes and condominiums. They are either managed by agents (property management companies) or individual owners.
  • Fix and flip: This is where you buy a distressed property, and you renovate it to make some profit. It is one of the trending types of real estate investments at the moment. Be sure to make the necessary calculations and make sure that you can resell the property at a profit even after renovating.

3. Land Real Estate


Raw land is one of the most lucrative types of investment you should look forward to. You can buy some piece of land for residential or commercial development. Land can be expensive, which means you must research widely before you buy some land to develop your property.

You also need in-depth knowledge of the real estate industry before you can think of investing your capital in raw land.

Here are some examples of land properties you can invest in as a first-time investor:

  • Land for farming: you can buy land and lease it to farmers for some annual land rates. Farmers are always willing to pay for the fertile land.
  • Residential development land. You can either construct rental properties immediately or in the future.
  • Land for commercial development
  • Land for mining

4. Commercial Real Estate


A commercial real estate is any space that you rent out for people to establish or run their business, think of gas stations, hotels, strip malls, and single business units. Every business owner pays rent unless they own the commercial property. Commercial properties are very expensive and may command a higher rate compared to residential properties.

Because they feature a long-term lease, you are assured a long-term income flow from the rent you collect. You have to hire a property management company to run your commercial real estate property if you intend to make some good money.

Remember, the business world is changing due to COVID-pandemic and other global issues. Before you invest in the commercial real estate space, first do market research to ensure that the investment opportunity is worth it. The last thing you want is to invest your resources in an industry that won’t give you good returns.

5. Crowdfunding


Crowdfunding platforms give you the chance to invest in real estate with highly accredited investors in the industry. Although some crowdfunding platforms are only open to established investors with a high net worth, you can still find one that meets your minimum.

Some crowdfunding platforms that allow non-accredited individuals to register with them only feature non-traded REITs. These are REITs that do not feature on the stock exchange market and are therefore a bit difficult to liquidate.

Most crowdfunding platforms have a shorter lifespan, which means you should only register with a platform that has been active for some time.

Final Thoughts

Investing in real estate should not be much of a challenge. If you are planning to invest your money in real estate, then REITs and crowdfunding platforms should give you a perfect opportunity to invest without owning expensive properties.

About Ronald Lamumbe