Which Real Estate Investment is best ?
The fundamentals for Real Estate Investing depends on what type of Investment is correct for your Portfolio. There are different types of plans, each one having its own advantage and characteristics.
To help you find which Real Estate Investment is best for you, we have listed few below for your reference.
Following are the 4 types of Real Estate Investment you can refer.
1. Commercial Real Estate
Commercial properties are either leased or rented to a business rather than tenants. Some example of such property can be a workplace building, a space in a mall, or a restaurant space.
Businesses will need to pay rent to the property owner every month for the term agreed in the contract. Which is normally longer than twelve months (condition applies unless the business owns the property).
Security deposits and monthly lease payments on commercial properties will be more than what residential properties require. However it can take longer to fill the commercial properties vacancies. It can also help you generate passive income for long period of time, considering some rental properties can go very long as five years.
2. Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) were created by the U.S. Congress. The aim is to make it simpler for the general public to own equity in income-generating Real Estate investments.
Most REITs generally own homes like rental units, hotels, office buildings and department stores. When investing in a REIT, you’re capable of owning a portion of the residences inside the REITs portfolio without having to fear about any direct risks of property ownership.
Unlike other real estate investing companies, REITs are required to follow the rules given by Internal Revenue Service (IRS). One of the main requirements has to return 90% in their taxable earnings to shareholders on a yearly basis. Not just effective does this let you get hold of terrific dividends, but REITs provide more liquidity than other kinds of investments. All you need to do is sell your stocks on the stock exchange to be able to get some quick cash.
Advantage of investing in Plots is that you will be able to determine whether you want the plot to become a residential property or commercial property. You will have the control to decide the look, finish and complete architecture of the property.
This type of investment requires more capital, market research & survey and a realtor to help you after the completion of the project.
4. Residential Real Estate
Residential properties can be a small family residence to a large house in a multi-unit constructing. This can have many uses — they can be put on rent, Airbnb, VRBO, or flipped to grow the overall rate of the assets.
While there are responsibilities that include being a landlord, residential houses can assist generate passive income and grow your funding portfolio. Turning your house right into a rental property will let you generate cash flow through rents, deposits, move-in costs, and pet’s cost.