Apartment rentals, REITs, prime real estate Land and crowdfunding platforms are all forms of real estate investments.
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There are many types of real estate investments but the majority of them fall into the two main categories of physical real property investments like land, residential and commercial properties, and other ways of investing that do not require physical propertylike REITs and crowdfunding platforms.
Investments in traditional physical real estate can offer high returns, but it also requires more money upfront and could have high ongoing costs. REITs as well as crowdfunding platforms have less of a financial barrier to entry, which means you can invest in multiple types of real estate for far less than it would cost to invest in a traditional property. Alternative real estate investments also offer the distinct advantage of not needing to leave the house or change into a suit to begin investing.
If you’re looking to invest in real estate there are five types you should consider:
1. REITs
The public market for publicly traded REITs that are publicly traded, or real estate investment trusts are companies that have commercial real-estate (think offices, hotels, along with malls). You can invest in shares of these companies through a stock exchange. When you invest in REITs, you’re investing in property these companies own and do not have the risks associated with purchasing real property directly.
REITs are required to return at the least 90% of their taxable income to shareholders every year. This means investors can receive attractive dividends in addition to diversifying their portfolios via real property. Publicly traded REITs also have more liquidity than other real property investments. If you find yourself suddenly needing funds, you may sell your shares through the stock exchange. If you want to invest in publicly traded REITs, you can do so via an broker account.
2. Platforms for crowdfunding
The real estate crowdfunding platforms provide investors access to real estate investments that could yield high returns, but are prone to risk. Certain crowdfunding platforms are open only for accredited investors, being those with the net worth or the combined net worth of one of their spouses, of more than $1 million — without excluding the value of their homeor an annual revenue during the past two years which exceeds $200,000 ($300,000 with the addition of a spouse).
“Keep in mind, many crowdfunding platforms are relatively new with a short history and have yet to experience an economic slump.”
Others, such as Fundrise as well as RealtyMogul and RealtyMogul, give investors who aren’t able to meet the standards — also known as”nonnaccredited investors” access to funds they would otherwise be capable of investing in. These types of investments usually take the form of nontraded REITs which are REITs that don’t offer trading on the exchanges. Because they’re not publicly traded REITs that aren’t traded can be very liquid, which means that the money you put into them will be invested for at minimum a number of years however, you may not be able to get your funds from the fund should you require it. Be aware that many crowdfunding platforms are relatively new with a short time-line, and have not yet been through an economic slump.
3. Residential real estate
Residential real estate is virtually anywhere that people live or reside, including single-family properties, condos and vacation homes. Real estate investors who invest in residential properties earn profits by collecting rent (or regular rent for short-term rentals) from tenants in their properties, by the appreciation value their property will gain between when they purchase it, and when they are able to sell it or both.
Affording residential real estate can come in many different kinds. It can be as simple as renting out your spare room or as intricate as buying and flipping the house to make the purpose of making a profit.
4. Commercial real estate
Commercial real estate refers to space that is leased or rent by a company. An office building rented by one business or gas station a strip mall with a variety of unique restaurants and leases are just a few an example of commercial estate. Unless the business owns the property itself the business will pay rent to the property owner.
Retail and industrial real estate may fall under the commercial umbrella. Industrial real estate typically is a property where goods are manufactured or stored, instead of sold, like warehouses and factories. Retail space is where consumers can purchase a item or service, such as the clothing store. Commercial properties tend to have longer leases and can command higher rents than residential properties, which could lead to a steady and higher future income for a property owner. They may also require higher down payments and property management costs.
5. Raw land
If you build it, will people come? The majority of investors purchase land for either residential or commercial development.
But buying land to develop will require a significant amount of market research, especially in the event that you are planning to develop the land yourself. This type of investment is best recommended for people with a large amount of capital to invest and an in-depth understanding of all things real estate – building codes, flood plains, zoning rules in addition to an understanding of the local commercial and residential rental markets.
Which investment in real estate is the best one on El Paso?
If you’re thinking about investing in traditional real estate -such as commercial or residential properties — taking your time and doing your research doesn’t just mean finding a the down payment. Knowing your local market is crucial. If there’s not much demand for commercial or residential spaces in your area or property prices begin decreasing, your investment could quickly turn into an obligation.
If you’d rather take a more relaxed approach to managing your investment portfolio, REITs and crowdfunding platforms provide a simple way to add real estate to your portfolio without having physical property.
Some brokerages offer REITs with a public trading market and mutual funds.
