Apartment rentals REITs, REITs, real estate as well as crowdfunding platforms are all examples of real estate investment.
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There are several types of real estate investments however the majority are classified into two types: physical real estate investments such as land, commercial and residential properties and other investments that don’t require ownership of physical property, like crowdfunding platforms and REITs.
The investment of traditional, physical real estate can offer the highest return, but it is also more expensive in the beginning and has high ongoing costs. REITs as well as crowdfunding platforms have the lowest financial barriers to entry, meaning you have the ability to invest in several types of real estate for lesser than it would for investing in one traditional property. Alternative investments in real estate also offer the distinct advantage of not needing to leave your home or get dressed to start investing.
If you’re planning to invest in real estate the following five types to consider:
Publicly traded REITs, also known as publicly traded also known as real property investment trusts, refer to companies who own commercial real estate (think offices, hotels along with malls). It is possible to invest in shares of these companies through a stock exchange. By investing in REITs, you’re investing in real estate they own, without as many of the risks associated with owning real estate directly.
REITs must pay at most 90% of the tax-deductible earnings to shareholders each year. Investors can therefore receive attractive dividends as well as diversifying their portfolios with real property. Publicly traded REITs also have more liquidity than other real estate investments. If you find yourself suddenly needing some cash, you can sell your shares via the exchange. If you’d like to invest in REITs traded on the public market, you can do so by opening the use of a brokerage account.
2. Platforms for crowdfunding
The real estate crowdfunding platforms provide investors access to real estate investments that may yield high returns, but are prone to risk. Some crowdfunding platforms are open only to accredited investors, identified as individuals who have the net worth or the combined net worth of spouse, that is greater than $1 million — without excluding the worth of their houseor an annual earnings within the last two years of more than $200,000 ($300,000 with one spouse).
“Keep in mind, many crowdfunding platforms have only a brief track record, and have yet to go through the economic recession.”
Other companies, including Fundrise as well as RealtyMogul, offer investors who don’t satisfy those standards — also known as non-accredited investors access to investments they wouldn’t otherwise be eligible to invest in. These types of investments usually take the form of REITs that are not traded as well as REITs that aren’t able to operate on the Stock Exchange. As they’re not publicly traded REITs that aren’t traded can be very liquid, which means that the funds you invest for a period of time and you won’t have the option of pulling your money out of the investment in the event that you need it. Remember that many crowdfunding platforms have a very short time-line, and have still to overcome an economic downturn.
3. Residential real estate
Real estate for residential purposes is anyplace where people live or remain, including single-family condominiums, homes, and vacation houses. Real estate investors in residential real estate earn money through the collection of rent (or regular payments for short-term rentals) from tenants who live in the property, by the appreciation value their property earns between the time they purchase it and when they sell it, or both.
An investment in residential real property can come in many different varieties. It could be as easy as renting out a spare space or as intricate as buying and flipping houses to earn an income.
4. Commercial real estate
Commercial real estate refers to space that is either leased or hired by a business. A office building rented by a single entity, a gas station, a strip mall with a variety of different businesses, as well as leased restaurants are just a few types of commercial property. If the business does not own the property itself in which case each business has to pay rent to the property’s owner.
Retail and industrial real estate could fall under the commercial umbrella. Industrial real estate typically refers to the properties where products are produced or housed, rather than sold, for example, factories and warehouses. Retail space is the place where buyers can purchase product or servicesuch as the clothes store. Commercial properties typically have longer leases as well as command higher rents than residential properties, which could translate into a more steady and stable long-term revenue for a property owner. They may also require higher down payments and property management costs.
5. Raw land
If you build it, would they be there? Investors usually buy land to develop either commercial or residential development.
However, purchasing land for development will require a significant amount of market research, particularly if you plan to develop the land yourself. This kind of investment is best at those who have lots of money to invest and a comprehensive grasp of everything related to real estate related — building codes, flood plains, and zoning regulations — in addition to knowing the local residential and commercial rental markets.
Which real estate investment is the best one on Abilene?
If you’re thinking about buying traditional propertiesincluding commercial or residential properties — being thorough doesn’t just mean coming up with an initial down payment. Understanding the local market is vital. If there’s little demand for commercial or residential space in the area you live in or property values start dropping, the investment can quickly turn into one of the biggest burdens.
If you’d prefer to be more hands-off with managing your investment portfolio, REITs as well as crowdfunding platforms provide a simple way to include real estate in your portfolio without having physical property.
Some brokerages offer REITs for sale on the open market as well as mutual funds.