Types of Real Estate Investment

Types of Real Estate Investment

Real estate investments are durable and serve as a long-term income to investors. North Dallas apartments for rent serve as an excellent residential property investment option. It is only natural that investing in property has become commonplace with more and more investors looking to secure money through property than stocks and bonds. There are many categories of real estate investments to choose from and the choice of the best rests with personal requirements and financial capability.

  1. Rental investment

The rental investment is the oldest and most practiced type of real estate investment. An investor purchases an established or new property, lends it to tenants and earns periodical income through rents. The major downfall in tenancy is wrong or defaulting tenants that can impact mortgage closure. Plus, it requires good management, such as to be able to attend to the tenant’s complaints in time and to maintain the property if something goes wrong.

  1. Commercial investment

Considered an excellent real estate investment option for those who have high capital, this category involves buying or building huge complexes and leasing it as office buildings, hotels, merchandise outlets, medical establishments or malls. These generate real revenue but incur substantial maintenance costs.

  1. Mixed investment

A combination of rental and commercial investment options, mixed real estate investment is for those who have significant wealth. The investors buy or build a massive complex, rent out the first few floors and lease the others to small shops, banks or gyms.

  1. Real Estate Investment Groups or Clubs

If an investor wants to own a property and rent it but does not wish to manage all rental aspects, he can ideally choose a real estate investment group or club. The group buys or builds apartments and allows investors to buy from them. The investors in turn give the group rental rights of their properties such as finding tenants and managing rent. In exchange for managing the rental property, the investors forward a percentage of the monthly rent to the group.

  1. Real Estate Investment Trusts (REITs)

These are typically corporations that buy and manage revenue-generating properties. Ordinary shares sold to investors, and a significant chunk of the profits is distributed as dividends to avoid income tax. Almost 90% profit is to be paid off to investors for the REITs to retain their status. Investors can choose between equity and hybrid REITs that handle both real estate and mortgage options.

  1. Property Trading

In this real estate investment option, a trader buys a property that has either a very low or a very high market value and resells it within months to earn sizeable profits. Also called flipping, the trader can either renovate the property and add value to it before reselling (long-term flipping) or merely resell it without any alteration (short-term flipping).

Before choosing any of the above investment options, it is the duty of an investor to understand each option thoroughly, find the loopholes, and select the one that is most desirable to his financial capacity.