What are the best types of properties to invest in?
Real estate investing is highly attractive for many reasons. It is a vital part of everyone’s financial plan. Not just individuals, but family offices, corporations, and other organizations too.
Of course, there are also many different real estate investment strategies, and different property types too. So, what are some of the best options today? How might you want to participate in them to gain all of the benefits they offer?
Single-Family Properties
Single-family homes are not just the most common property type but are also one of the most common investments.
Why Invest In Single-Family Properties
This is the core or bread and butter of the real estate space. These properties can offer many advantages, especially for newer investors.
Some of these advantages include:
- The largest end buyer pool for exiting quickly and for significant profits
- Millions of properties to choose from
- Great financial leverage available
- Ease of access to entry and affordability
- Most easily understood asset class for new investors
- Easy diversification
How To Do It
There are many ways to invest in single-family property, including:
- Real estate wholesaling
- Fixing and flipping houses
- Operating both long term and short term rentals
Multifamily Properties
Multifamily properties are often the next step up as real estate investors graduate to new levels in this industry. Of course, you can dive right into multifamily real estate investing from the start too. These are classified as five-plus unit residential properties. Properties falling under this umbrella may include townhomes or entire apartment building complexes.
Why Invest In Multifamily Properties
There are many advantages of investing in multifamily over single-family properties, including:
- Lower average price per unit
- Economies of scale, in operations, and net profit
- Acquiring 20 or 100 units with the same effort as one single family
- Built-in diversification
- Rental apartments are always going to be needed
How To Do It
Strategies you may apply here include:
- Renovating, reposition, and reselling
- Long term hold for passive income
- Conversions to or from condos
New Construction Properties
New construction property investing can either mean being involved in the building and development of new buildings or acquiring newly built inventory. This can be a higher-risk strategy for green investors on limited capital. However, it can also be used to create significant value during any phase of the market.
Why Invest In New Construction Properties
There are many advantages of investing in new construction properties over existing older inventory, including:
- Creating your own inventory whenever you need it
- Depreciation and tax benefits
- Acquiring or developing assets in high volumes
- Lower maintenance costs
How To Do It
Investment strategies that you may apply here include:
- Building single-family, multifamily, or commercial property
- Acquiring entire communities at discounts
- Assemblage
- Teardowns and rebuilding on prime property
- Building to flip or rent
Commercial Properties
Commercial property investing is often considered the preferred asset class for more savvy investors. There are many types of commercial real estate (CRE). This ranges from mixed-use to churches, distribution centers, industrial manufacturing, and more.
Why Invest In Commercial Properties
There are many advantages of investing in commercial properties over residential, including:
- Less regulation
- Higher grade tenants
- Income generation
- Larger deals for deploying large amounts of capital efficiently
How To Do It
Investment strategies that you may apply here include:
- Private lending backed by commercial property as collateral
- Private commercial real estate funds
- New construction
- Repositioning and rezoning
- Buying to lease
Which property type will you start with? How will you graduate from adding all of these asset types to your portfolio?
