What are the forms of real estate investments?

What are the forms of real estate investments?

Investors know of real estates, but not all of them are familiar with the different forms of real estate investments. The world of real estate is diverse with different types that you can engage in. Each type comes with its merits and demerits that range from cash flow cycles to standards. You should, therefore, study each type well before choosing the best type to use.

For you to own Durham real estate or flip it, you should understand what makes one form of real estate different from another. Let us look at some of them starting with residential investment. This form of investment involves properties like houses and apartment buildings. Here, you can invest in the property and rent it out to a family to occupy it.  As the investor, you provide them with a lease agreement for them to sign that lasts for a certain period. The rental agreement determines how long they can occupy the property.

Commercial investment

Commercial investment is also another form that includes buildings for commercial purposes. In this form, you construct a building containing offices for business owners to occupy. You can lease them to small business owners or companies. The business owners, in turn, pay you their rent for occupying your property.

Commercial real estates sometimes involve leases for a lot of years. They can give you stable cash flow and protect you against the decline of rental rates. Industrial investments also exist. They involve leasing industrial warehouses to a firm over a long-term agreement. You can get sales from occupants of such a real estate. They, however, involve high fees as well as service revenue for an investor to get high returns.

Another form of real estate investment is the retail type which includes big malls and retail storefronts. As the landlord of such an investment, you can gain from a percentage of the sales that are generated from the tenant store. This is in addition to the rent that they have to pay for occupying the property.

Combining categories

Some investors also choose to combine more than one category of real estate investments into one project. You can build an office building containing retail shops with the help of finance from a lender or the bank. This investment can generate a lot of income in the form of rent and also a percentage of the sales made by some shops. If you choose this type, lease the different spaces to various business owners who look promising. This form of investment, however, involves a lot of risks.

You can also invest in other ways if you are not willing to deal with properties. Investing through REITs is an alternative in this case. It allows you to buy shares from a corporation which has real estate properties. From it, you would be earning income in the form of dividends. This form requires the right valuation and an adequate safety margin. It is advisable to get a REIT that matches an industry you desire. For instance, you can get a hotel REITs if you wish to own hotels.