Real estate is one of the best investments a person can make. Literally, anyone with a few solid dollars can invest in it. A young couple from Daybreak, Utah with cash to burn can buy a property for sale the same way retired folks down at Charlotte, Florida can measure up properties they can invest in.
New investors can check out what types of property or real estate investments they can make below.
Residential Real Estate
Residential real estate includes homes in suburbia, condominiums in city centers, and apartments beside downtown shops. If people buy it to live in it, it falls under this type.
To remain classified as residential real estate, property under this classification can’t be used for commercial or industrial purposes. If that’s still a little confusing, think of it this way: residential real estate revolves around the needs of a family, while commercial real estate is concerned with what business owners and customers want.
Commercial Real Estate
Commercial real estate implies that the property is for commercial use. These properties include shopping malls, boutiques, office buildings, and medical clinics.
This type of real estate has four subcategories: office, retail, industrial, and residential. Unlike the residential real estate described above, residential under commercial real estate means units for sale or for rent.
The land property has two types: improved and unimproved. Unimproved land is what you can imagine when you think of the word land: large, undeveloped; an open, grassy canvas. An unimproved piece of land will need water and electrical connections when it’s developed into a property. Improved land has several utilities already installed and is construction-ready.
Don’t Buy at All
This may sound counterintuitive, but another great way to invest in real estate is to avoid buying property. What you can do instead is to buy real estate funds.
Real Estate Investment Trusts (REIT) own income-producing real estate. Investing in one allows you to earn a share of that income without the need to buy your own property.
Real Estate Exchange-Traded Funds (ETFs) invest in REITs and are considered less risky than the former.
Real Estate Mutual Funds (REMF) differ from REITs as it’s formed by investors and managed by a mutual fund manager. There are no voting privileges for REMF owners. What REMF owners can do is allow their shares to mature until they decide to pull out, which they can do any time.
When you’re starting out, make sure you have the right information. Check out local seminars on real estate investment in your community center or college, bank, or investment firm for solid, firsthand information. Verify the websites you get information from, as well as the “experts” you come across in forums.
Lastly, make sure you have backup funds. In case of major losses, these funds will be your lifeline. A survey in 2018 showed that only 28% of Americans have enough savings to cover six months of unemployment. If you’re going to invest your hard-earned dollars, make sure you’re not left with bare amounts.