• With So Many Areas of Real Estate Investing Options to Choose From, Read on To Find Out How You Can Decide Which Area to Specialize In

    The Many Different Types of Real Estate Investing & How to Choose Your Niche

    So, you want to become a real estate investor? The first thing you should realize is that there are different areas of investing. Some invest in land, others in residential housing, some in apartment buildings, some in commercial property. Before you dive in, you should try to get an idea and decide which type of real estate investing you want to become involved in. Read on to learn more, so that you can decide which aspect of real estate investing is right for you.

    Basic Land: Some real estate investors choose to focus on land. One of the reasons for this is that there are so many different options in terms of what can be done with the land after it is sold. Many investors decide to hold onto the land until it is needed, while others purchase it with the intention to build.  

    Family Homes: Another option regarding real estate investing, is purchasing homes. Usually, with the intent to “flip” them. This means that they find a decent, or promising house, with the intent to upgrade it and sell it for much more than they paid. This can be a risky investment, however, it can also prove very rewarding financially. Other times, the investor will buy the property with the intent to rent it out. Realize that the location plays a big part in whether or not this type of investment will pay off.

    Apartment Buildings: This type of investing usually pays off pretty well. However, if you are considering purchasing apartment buildings, you are likely going to need a property manager. One perk of buying a smaller building (five or fewer units) can be purchased without having to use a commercial loan. Many times, the investor will live on one side and rent out the others; this way, they can live there without having to pay rent, and the tenant is basically paying his or her mortgage. Buildings containing four or fewer units often have the advantage of being bought without having to qualify for a commercial loan. 

    Complexes: Large apartment complexes are those that have over fifty units. These can be a great investment, as risks are usually significantly lowered. In this type of investment, usually several buyers will unite and purchase the property together.

    Investment trusts: In this type of investing, several investors work together to purchase several pieces of property, along with commercial. Consider real estate investment trusts as mutual funds. One downside is that the investors usually don’t have much of a say in what happens with the trust

    Commercial: You should know that this is likely the riskiest type of property you can invest in. You can make a pretty penny when the building is rented (most of the time), but when the building is vacant, you are making nothing. And it isn’t cheap to keep a commercial building running. Depending on where the building is located, it could also go unrented for a very long time.

    All in all, in order to become a successful real estate investor, you must find which area of the business you will be good at. For example, if you aren’t an extrovert, becoming involved in investment trusts probably is not a great idea. If you prefer working in smaller groups, you should probably stick with residential properties. Just about no real estate investor invests in all sorts of properties. They usually find their niche, and stick with what they are good at. Investing is not a ‘jack of all trades’ profession. However, the more knowledge you gain, the more successful you are likely to be in the business. Be sure to network at any opportunity. Listen to books on tape, attend real estate conferences, and get to know people.

     

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    2 thoughts on “With So Many Areas of Real Estate Investing Options to Choose From, Read on To Find Out How You Can Decide Which Area to Specialize In

    • Henry says:

      Is it necessary to attend real estate conferences? I realize that they are probably informational, but can’t I find the same information and lessons in books, magazines, and audio books?

    • Carol Wilson says:

      Hi Henry! It is absolutely necessary! All of the knowledge is great, but where you really shine in learning real estate is by putting all of that knowledge to practice. Real estate is all about working with people. You can learn about negotiation, but you won’t truly master it without performing it with others, for example.

      So, you need to attend real estate conferences so that you can network with people, grow your business, and then that is when you start applying all of the tools you’ve learned. Good luck!

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