Real estate investment usually involves various types of properties which people rent for different purposes including retail, industrial, commercial and residential uses. As a prospective investor, it is very essential that you find out the profit, risks and circumstances associated with each of these real estate investments.
Nowadays, all of the aforementioned real estate properties are found in urban areas and they demand various requirements on the part of prospective lessees such as businesses, companies and home owners. If you’re interested in venturing into real estate investment, below are the 5 common types of properties you could be investing in.
Going by the norms of this type of real estate investment, people invest their money in the construction of buildings such as skycrapers and office premises. The buildings are termed “commercial properties’’ and can be big or small in size. Owners can decide to lease these buildings for many years to companies, firms or business owners.
Commercial properties often guarantee their owners a reliable stream of residual returns. Owners of these properties benefit a lot most especially during the periods of increase in rental rates. Even when there is a reduction in rental rates, building owners still have nothing to lose in terms of cash flow.
Obviously, this is the best type of real estate investment for those seeking to invest their money in properties that will serve various purposes including commercial and retail uses. Mixed-use properties are usually substantial in nature and they offer multiple spaces people can use for various purposes. On a good note, those investing in mixed-use properties do not usually bear huge risks because they find it easy to manage these properties based on the demand for the spaces in them. Generally, investment in mixed-use properties often combines the features of the other types of real estate investments discussed in this article.
In this type of real estate investment, residential properties are leased to occupants by their management. Such properties could be condos, houses or apartments and those who wish to live in them pay certain amounts of money to the management. . Importantly, the agreement reached between the lessor and the lessee (or occupant) determines how long the latter will be staying. Also, the amount of money paid often depends on several terms and conditions including the length of time over which the lessee wishes to stay.
Investments on condos has proved to be very profitable especially if you are living or doing business in a busy city like Los Angeles. You can expect huge price increase over time. Check out LA condos for sale to find many cool condo deals. If you are looking for properties in more specific location like Santa Monica, you can consult some Santa Monica realtors to make smart real estate investments.
This type of real estate investment requires less capital than what is needed for investment in commercial properties.Conventionally, investment in industrial properties is very suitable for those seeking to pay attention to the business of real estate.
Industrial properties are used for different purposes and they also come in various types. The purpose of the property often depends on its structure and features. Some of the common types of industrial properties in real estate are storehouses, distribution houses, manufacturing units and research stations.
Under this type of real estate investment, people invest their money in the establishment of shop fronts, shopping malls, step malls and several other properties established for the provision of retail services. The owners of retail properties can earn in various ways depending on the agreement between them and the lessee. However in most cases, the tenant of the retail property pays the owner a certain percentage of their sales.
There is need to keep a retail property in good condition and by reason of this, the owner receives a certain sum of money from the base rent paid by the lessee. Meanwhile, the sum the owner receives here comes in addition to the money the tenant pays as part of their sales.