How to Know the Right Kind of Real Estate Investment for You
There are many types of real estate investment. But no matter how much money you’re making, not every type will suit you. Real estate investing is not a one size fits all. Neither it is a one size fits most. More or less, investing in real estate is custom-made and demanding except maybe for investing in real estate investment trust (REIT).
Just as with any investment, success comes from knowing which type of investment will best suit your business preferences, financial capacity and maybe the amount of time and effort you are able and willing to give. Knowing how to spot a bargain, is definitely an important key and an additional plus point to have! But for now, here are a lot of important things that you should know:
Types of Real Estate Investments
Basically, real estate investment can be classified as:
- Residential – apartments, condominiums, houses
- Commercial – office spaces
- Industrial- storage rooms, warehouses, factories, garages, hangars
- Mixed use – a combination of two or more of the other real estate investment types
- Retail – restaurants, malls and mall strips, department stores, supermarket buildings
- REITs – securities (stocks) that are invested in real estate projects and mortgages
Figuring Out The Best Type of Real Estate Investment for You
When it comes to figuring out the perfect investment choice for you, there are only three things to consider: gains, risks, and self assessment.
GAINS – Gains are everything and anything that you get from a certain type of investment. How is one type of real estate investment better earning than the other? How much, possibly, could investing in an apartment complex in the suburbs give you back compared to investing in an office space in the city? How much more will a REIT investment gain you compared to just renting out a house?
RISKS – Risks should include both the probable losses and actual disadvantages of getting a type of real estate investment. How much money do you need to shell out for maintenance of a retail strip? How difficult is it to maintain an apartment complex? How difficult is it to sell a condominium unit? Practically every disadvantage should be listed down as a risk.
SELF ASSESSMENT – There is never an investment that is 100% fool proof. Every investment is always potentially good, especially real estate, and each one is an opportunity. But the success (or failure) of any investment and endeavor relative to the investment relies mostly on yourself. How well you assess yourself financially is also a deciding factor in choosing which type of real estate investment to put your money in. How much can you afford? Can you see yourself maintaining an entire apartment complex full of different strangers? What do you know about REITs?
When it comes to choosing the right type of real estate, the secret is always to weigh the gains against the risks on account of your self assessment. How well do you balance yourself in that investment situation knowing your gains and risks? Are the gains good enough for you despite the odds that come with it? When it comes to real estate investing, make sure you choose wisely.