3 Most Profitable Types of Real Estate Investment
Now, if you are ready to invest, here are the 3 most profitable types of real estate investment.
1. Commercial Real Estate
A commercial space is definitely one of the most profitable types of real estate investment. There are many types of commercial spaces, including industrial, retail, office, and even parking spaces. Investing in a commercial space is generally expected to yield a high return on investment. Moreover, you will be renting to a business rather than an individual. This means the whole process will be smoother, as businesses tend to care about their image and will therefore properly manage the property. Furthermore, most businesses tend to pay rent on time, as they do not want to lose the space. If you find an opportunity to invest in a commercial space in a booming area, consider taking the prime real estate opportunity before it is too late.
2. Residential Rental Properties
Usually, a safe path to take, residential rental properties are a straightforward investment. If you invest in a residential property, you will be making money out of the monthly rent you receive from the tenant. In the long run, this can make a lot of money. You will also guarantee an income on a regular basis. However, you should keep in mind that the property will need regular maintenance to keep its value. Moreover, you might come across tenants who fail to pay on time or refuse to pay for any damage they have caused to the property. You may also be unable to rent out the property for a period of time. All these are obstacles that may affect the profit you make out of this investment. If for any reason, you decide to sell the property, you will probably profit from the sale. While most real estate properties are expected to see an increase in value, it is best to invest in an area that shows growth potential. This will almost guarantee that you are able to continually rent it out and even benefit from selling it if you decide to do so.
Bought with the purpose of re-selling, a fixer-upper is no easy task. This property is usually in a bad condition when purchased and bought for a relatively cheap price. The investor then fixes it and sells it for a profit. This type of investment is best for those who are looking to make money fast. However, keep in mind that this type of investment requires expert realty knowledge and intensive work. First of all, you will need to find an almost run-down property that shows great potential. Then, you will need to find easy and cheap fixes that will increase the property’s value. Finally, you will have to market the property in order to make money out of the sale. Investing in a fixer-upper requires creativity, knowledge, and a lot of effort. If done correctly, this type of investment is guaranteed to make you profit in a relatively short period of time.
Which real estate investment is right for me?
Before you invest in any type of property, remember that you are not looking for the most rent, you are looking for the most profit. Making profit will depend on several factors, including the invested amount and the capital growth. Capital growth, or capital appreciation, is the amount your property increases or decreases in value over time. This means that you must consider the area you are investing in as well as the property itself. For example, investing in a studio apartment in a growing district may be more profitable than a five-bedroom villa in an area with no potential. The size of the property itself is not more important than other factors that contribute to its appreciation in value.
Ultimately, the best type of investment depends on what you are looking for. If you want to make quick money, maybe invest in a fixer-upper. If you are willing to wait, you can choose between a residential or commercial property. The decision will also be affected by how much money you have to invest. Regardless of the type of property you choose to invest in, always remember to study the market well. Conduct an analysis of the area and property to determine growth potential. You can also consult a professionalif you require more knowledge before making your decision.