Types of Real Estate Investments You Should Know About
There are many different types of real estate investments that you can make. It can be overwhelming to try and figure out which ones are the best for you. Franklin Realtors will help you out to overcome those difficulties.
Residential Property: This type of real estate investment involves purchasing and renovating residential properties, such as single-family homes, duplexes, triplexes, and fourplexes. The goal is to rent out the units in order to generate income. Pros include being able to control your own rental rates and having a steady stream of rental income. Cons include potential tenant problems and dealing with repairs or maintenance issues for tenants.
Commercial Property: Commercial real estate investments involve buying or leasing retail stores, office buildings, multifamily complexes, industrial properties, and other types of commercial buildings. Pros include the potential for higher returns on investments than residential properties due to longer leases and higher rents. Cons can include difficulty in finding tenants, more expensive initial costs, and additional maintenance requirements.
Land: Investing in land involves buying a piece of undeveloped real estate with the hopes of reselling it at a higher price or developing it into something more profitable. Pros include the potential for large returns if the land is developed properly. Cons can include high initial costs and the risk that you may not be able to find someone to purchase your property or develop it as desired.
Fix-and-Flip Properties: Fix-and-flip properties involve purchasing an existing property that needs repairs and renovations, making those improvements, and then reselling the property for a profit. Pros include quick turnaround times due to short holding periods and the potential for large returns. Cons can include difficulty in finding good deals, high initial costs, and dealing with the often labor-intensive repairs.
REITs (Real Estate Investment Trusts): REITs are publicly traded companies that invest in real estate. Investors receive a share of any profits generated by the portfolio of properties owned by the trust. Pros include diversification benefits and potential for passive income streams through regular dividend payments. Cons include lack of control over how the company’s money is invested and potential liquidity issues due to illiquid secondary markets.