Investing in Real Estate? 10 Options to Consider!
For those that want to start Real Estate investing, here are 10 options to consider. Real estate investors come in various shapes and sizes, each with their own unique goals, strategies, and approaches to investing. Here are some of the most common types of real estate investors:
Residential Real Estate Investors:
These investors focus on residential properties, such as single-family homes, condos, townhouses, duplexes, triplexes and 4 unit properties. These all qualify for residential type financing. They may buy properties to rent them out, flip them for a profit, or hold them for long-term appreciation. I’ve got another blog post that goes into more detail and provides help in answering the question; Is Residential Real Estate Investing the Right Strategy for You?
Commercial Real Estate Investors:
Commercial real estate investors focus on properties used for business purposes, such as office buildings, retail spaces, industrial warehouses, and multifamily apartment buildings. They may lease these properties to businesses or other tenants, or they may develop and sell them for a profit. Most investors will consider each of the Asset Types (Office, Retail, Industrial, & Multifamily) as a separate strategy and will typically focus on just one asset class for their investing. For more detail on Commercial Multifamily, check out my blog post: Commercial Multifamily Investing. How to get Started!
Wholesalers:
Wholesalers are investors who find off-market properties at a discount and then sell them to other investors for a profit. They typically don’t hold onto properties for long and instead focus on finding and flipping deals quickly. I’ve always considered Wholesaling as an active income source and not really investing. Once you stop sourcing deals, your income stops. While it’s a good way to get involved in Real Estate and make some money, you’d probably be better served to invest that money in another option.
Fix-and-Flip Investors:
These investors buy distressed properties, renovate them, and then sell them for a profit. They often look for properties that need cosmetic or structural repairs and are willing to put in the time and effort to make them market-ready. In my opinion, flipping is active income. The tax benefits aren’t as good as other real estate investments. Your Iincome will likely be taxed as ordinary income.
Buy-and-Hold Investors:
Buy-and-hold investors purchase properties with the intention of holding onto them for the long term. They may rent out the properties to generate income or hold onto them for appreciation. This strategy is often used with residential and commercial properties. The advantage of holding real estate for a long time (5-50 years) is that historically rents will rise, and property will appreciate. Most seasoned investors know that time is your friend in real estate. Buying a marginal deal in a great location right now even with high interest rates, can be a great deal 10 years in the future. I’ve covered this strategy in more detail in this blog post: The Buy & Hold Strategy is a Great Way to Build Wealth!
Real Estate Investment Trusts (REITs):
REITs are companies that own, operate, or finance income-producing real estate across a range of property sectors. They allow investors to invest in real estate without having to buy, manage, or finance properties directly. This is a pretty passive way to invest in real estate, most of the major investment brokerage firms (Vanguard, Fidelity, etc) offer ETF’s or Mutual Funds that primarily hold REIT’s or Real Estate.
Crowdfunding Investors:
Crowdfunding platforms allow investors to pool their money together to invest in real estate projects. This allows investors to diversify their portfolios and access opportunities that may not be available to individual investors. This is another passive income / investing strategy, you must do your due diligence before investing any money. Be satisfied that it’s a reputable company and are comfortable with the risk, this option doesn’t take much work.
Private Equity Investors:
Private equity investors are typically high-net-worth individuals or institutions that invest in real estate projects or companies. They often provide capital in exchange for equity ownership or a share of the profits.
Real Estate Syndicators:
Syndicators are investors who pool funds from multiple investors to purchase and manage real estate projects. They typically take a management fee and a share of the profits in exchange for their services. Examples of syndicators are: Grant Cardone (Cardone Capital), Joe Fairless (Ashcroft Capital), and many, many others. Please do your research on these companies and take a really hard look at their Private Placement Memorandum (PPM). The PPM provides details on the returns offered, the property / asset, their valuation, and their projections for operating and capital expenses and rent growth.
Real Estate Developers:
Developers purchase land or existing properties with the intention of developing or redeveloping them into new projects. They may build residential or commercial properties, or they may convert existing properties into new uses.
Conclusion
These are just a few examples real estate investing options. Each type has its own unique strategies, risks, and rewards, and investors may use a combination of these strategies depending on their goals and preferences. I’ve added links to more detailed blog posts on those investing options that I believe I can speak about and add value to your decision on what Real Estate Investing option is right for you.
