5 Types Of Property Investment Mira-fx.com: There are numerous advantages of investment, especially in real estate. But there isn’t a single type of real estate investment.
You might not know those types if you are just entering this sector. Most people consider it as buying properties and then selling them.
But that’s not the only thing; real estate investment is far beyond that. You have done the right thing by searching for “5 Types Of Property Investment Mira-fx.com.” Because knowing what you have on your plate is important before eating.
And investment is just like that; knowing about all the available options you’ve is essential before investing.
But before starting with the five types, let me explain two terms. These two terms will help you understand the division properly.
Majorly, real estate investment is of two types – active and passive. In active investment, the investor not only has to invest his money but also requires time and sometimes physical labour.
Passive investment
It is a type of investment where the investor doesn’t need to own a property.
5 Types Of Property Investment Mira-fx.com
Now, let’s talk about the five types of investment in real estate.
- Residential real estate
It is a widely known type of investment in the real estate sector. But most people consider that it only consists of buying and selling the property. Do you also think so? If yes, you’re mistaken. There are various types of residential real estate, from flipping to vacation renting.
Those are –
Long-term rental property
It is the property which people buy with the motive to rent it out to people. The size of the property isn’t fixed.
In this, the owner fetches money from rent or selling the property at better rates.
Vacation rental
It is more like a long-term rental property because, in this, the individual buys it and then rents it out. But it is rented to visitors who wish to stay for a short period of time.
Although work in this kind of investment is high because either the investor has to hire a person for upkeep and collecting rent or he has to do that.
Flipping houses
It is a risky investment where the investor purchases a property, makes repairs and upgrades it and then sells it. In this, the investor has to put in a lot of money, so he needs to have a good cash flow.
Micro-flipping
Micro-flipping is when an individual buys a property for less than its actual price and resells it. Sometimes, the buyer doesn’t even upgrade it before reselling it.
Accessory Dwelling Units
These are additional spaces on the owner’s property that they rent out to others. It is one of the best-suited options to generate extra money from the current property.
Now, let’s know why you should and shouldn’t invest money in residential real estate.
| Advantages | Disadvantages |
| It can give a lot of return on the investment. | It’s expensive, so not everyone can invest in residential real estate. |
| Favours value more than time, especially in flipping types of investment. | If the investor manages the property himself, it can be extremely time-consuming. The owner has to fulfil responsibilities like collecting rent, keeping up with repairs, etc. |
| Tax benefits like tax deductions, etc., are given to the investor. | The property can’t be sold quickly if any situation like that arises. |
- Commercial real estate
You can consider it the opposite of residential property investment. In this, the property is rented for businesses. Hotels, offices, retail stores, etc., are examples of this type of investment.
➡️ It is an active type of investment.
Some pros and cons of this type of investment are –
| Pros | Cons |
| It is famous for yielding higher returns in comparison to residential types. It can be lucrative if the investor is good at managing a commercial place. | The investor has to be concerned about the public and the tenant. |
| The value of this property depends on how much revenue it fetches. | The owner might have to deal with a lot of tenants. |
| There will be more of a professional relationship between the tenant and the owner. | Professional help can also be needed to keep the place up to standards. |
- Raw land
Raw land is the area that has nothing on it; no buildings, no crops or otherwise. So this land is more affordable to invest in than other real estate properties. You can also consider taking a loan to purchase this land, especially if you are thinking of developing it.
Pros and Cons of investing money in raw land are –
| Pros | Cons |
| It’s easy to buy and is affordable, especially in comparison to developed spaces. | The investor can’t make money with raw land except if he sells or upgrades it. |
| Maintenance costs are also not high. There’s no need to be concerned about repairs or upgrades. | If the investor wants to resell the property, he may not find a quick buyer. |
| The investor has multiple options. He can sell it as well as develop it. | The zoning of such land is considered complicated. |
- Real Estate Trust Investments
These are organizations that work as trusts. In this type of real estate investment, the investor doesn’t need to own property. He can invest in REITs and fetch profit from properties managed by the organization.
➡️ It is a passive type of real estate investment.
Now, let’s learn about the positive and negative sides of REITs.
| Positive | Negative |
| The investor doesn’t need to take the workload of investment. Besides, less money can also be invested. | It isn’t a quick money-making option because it is best suited for long-term investment purposes. |
| REITs can aid investors in diversifying their investment portfolios. | High taxes on the return investor gets. |
| The returns depend on the company the investor has invested in. | The investor has little control over their investment. |
- Real Estate Crowdfunding
It is a passive investment type. In this, investors band together to pool their funds and invest where they can’t invest on their own.
The advantages and disadvantages of real estate crowdfunding are –
| Advantages | Disadvantages |
| It’s one of the best ways to diversify an investment portfolio without putting in too much money. | The investors are taxed on the dividends. |
| Provides access to great opportunities that the investor might not access without other’s help. | Sometimes the investor needs to have a certain amount of income to become a part of crowdfunding. |
| Little effort is required, and everything can be done online. | Platforms can charge high fees for letting users use their services. |
End Note –
So this is all about the 5 types of property investment. Every type has its own benefits and negative sides. So before investing, I would only suggest you consider every point. Good luck with your investment..!!
Frequently Asked Questions
Five common forms of investing are stocks, bonds, mutual funds, options, and index funds.
The four main types are land, residential, commercial and industrial.
They are bond funds, dividend stocks, value stocks, target-date funds, and real estate.