If you are an investing newbie and are thinking of investing in Irmo rental real estate, you may have noticed that there are several options out there. Rental property investors, in particular, have a variety of choices when it comes to property type, size, and function. If you’re not sure which type of rental property is right for you, start by understanding the four main types of real estate and the reason for each one. Then narrow down your options until you find the type of rental real estate that best caters to your needs and goals.
Residential
Most new real estate investors thinking about a purchase choose a residential rental property. Of course, there may be an excellent reason for this: the residential real estate market is enormous! In 2020, it was valued at $33.6 trillion and still growing. By definition, residential real estate is purchased and occupied as a home by owners or tenants.
Within this broad category of real estate, there are a variety of residential properties: townhomes, duplexes, multi-family buildings, single-family residences, and more. Thanks to changes in lifestyle and the renter demographic, single-family rental properties have been in high demand for years. This makes investing in single-family properties one of the most popular options for new investors.
Commercial
Another type of real estate is commercial real estate. This type of property is used only as a workspace or to conduct a business or trade. As with residential properties, there are several types of commercial properties. Office space, retailers, restaurants, hotels and resorts, and even healthcare facilities all fall into the category of commercial real estate.
There are lots of benefits of investing in commercial real estate, as it can be a very profitable option for some investors. The drawback, however, is in the initial cost. Commercial properties tend to have a higher purchase price than residential properties. This can be discouraging for many new investors.
Industrial
Although technically part of the commercial real estate category, industrial real estate is quite unique, as it is often designated to be used in very specific ways. Examples of industrial real estate include car manufacturers, storage and distribution centers, food processing centers, power plants, and research and development parks.
There are also three different classes of industrial real estate – A, B, and C – so you really need to do your research before you think about investing. Leases on industrial properties have the potential to be very lucrative, and they tend to be very long-term holdings. And, like commercial real estate, the purchase price for industrial properties is quite high, especially if such properties are in high demand.
Land
The fourth and final type of investment property you need to know about is land investment. In most cases, raw or vacant land is purchased with the objective to develop it in some way or to use the natural resources on or under the land for profit.
For most investors who own land, this would include extending leases that allow tenants to harvest minerals or water, oil or mining, timberland, orchards, or to use as farms, ranches, and recreational activities. Buying raw land, in particular, is a highly speculative investment that carries an equally high degree of risk. But in the right circumstances, leasing land can be very profitable for a real estate investor.
With so many different options available, most real estate investors will focus on one type or sub-category of real estate. This can be particularly effective when you are just starting since it takes time to learn everything you need to know about investing in each type of real estate.
If you are willing to start investing in residential rental properties, we can help! Our local Irmo property management experts work with investors like you to help find, prep and lease quality residential rental homes. Contact us today to learn more.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
