Investing in real estate is an excellent way to generate income. You have so many strategies to choose from. But which types of real estate investments might be best for you?
Trading and development options are available to every economic class of investors. Flipping properties is a useful strategy for those looking to return a quick profit. Others look to diversify their portfolio or grow returns over time by trading on the stock market.
Our experts in real estate developments in Chicago have created a list of the three types of real estate to explore, making it easier to find what suits you best.
We begin by identifying some of the most common physical investment options. These range from single homes to large-scale land purchases. Many real estate investors choose physical property so that they can take direct charge of building equity through development.
Buildings and land require a lot of attention to make the investment valuable. Upkeep, development, and insurance are all expenses to consider when choosing physical property. The biggest advantages of physical investments are evident in higher returns.
Residential Real Estate
Residential properties include buildings that have no more than a few units. Multi-family houses and multiple vacation homes within an area are great examples of these investments. Renting out units and homes for regular collection is the most effective way to make income with this form of property.
Landlords often own several homes within a concentrated area. This form of real estate holding tends to be the most accessible for middle-income investors.
Commercial properties are buildings encompassing structures such as multi-unit apartment complexes, stores and restaurants, industrial infrastructure, etc. These investments are typically more expensive up-front than residential properties. They do, however, have the capacity to yield higher returns.
A business owner is more likely than a residential renter to pay higher rent with longer leases for the space. Investors can make even greater returns if they put money into a building with multiple storefronts or offices.
Physical real estate also includes undeveloped land. Owning raw land gives investors many options. Zoning the area for future residential or commercial urbanization is one way to develop land. Cleaning it up, maintaining and enhancing its natural features, or beautifying the environment are ways to improve natural value.
Ownership of land can vary depending on size and needs. Investing in thousands of acres in one location may not be as profitable as owning a few hundred in another. It is always best to conduct adequate real estate market research on land before investing.
A real estate investor has many strategies at their disposal to create the most worthwhile return. Managing physical types of real estate investment gives flexibility in how you choose to develop and sell. Here are some popular methods that investors use today:
House flipping is a term to describe fixing up a property to a value higher than one initially paid for it. Improving the building allows you to make your money back plus a profit. Flipping also has an impact on the value of nearby properties.
Always be sure that repair and other upkeep costs will not leave you in the red. Flipping a building requires a certain amount of care and planning.
Long- and short-term leasing is the process of buying property and holding it for a determinate amount of time.
Holding and leasing allow investors to rent out units and property to tenants and collect regular payments. For some residential homes, leases may last six months to several years. Properties like vacation homes may only lease for a few days.
Remember that regular upkeep of the property and communication with tenants are essential in making this investment strategy worthwhile. Investors should take care vetting tenants so that they do not lose money on unnecessary damages.
Owning and trading real estate shares on the stock market is a great way to enter lower-cost investment.
You can achieve successful trading by following real estate market trends. For investors who don’t have the budget to buy physical property, buying real estate stocks is an ideal option. This practice can ensure they have a hand in several different types of real estate.
Non-physical real estate can also remove the expenses of upkeep, repair, and tenant communication. This advantage frees up time and money so an investor can continue to invest elsewhere.
Another advantage is that you have the ability to buy and sell shares across the country, which is a convenience for removing the challenges of attending to real estate around your area.
A Real Estate Investment Trust (REIT) is an entity that owns multiple types of real estate properties. You can find large REITs that own buildings like theaters, large urban office structures, and grocery stores. Smaller investors might find shares with companies that own residential areas or storefront property.
Many advantages exist to investing in REITs. You can diversify your stock portfolio. You may also sell shares easily on the market for a faster return.
You can crowdfund many projects and investments today, including real estate. Crowdfunding real estate means that an individual investor puts forward a certain dollar amount so that a developer or company can use their funding as part of a collective group of investor funds. Funding this way helps to improve a property and increase its value.
You will usually find very little financial pressure investing in crowdfunding. Investors can put as much or as little into the fund as they see fit. Loans can earn annual returns at high percentages, depending on the investment. Some of these short-term loans might also conclude within a year.
Now that you know the real estate investments options worth looking into, let us help! At DAC Developments, we are a company that values giving the most to investors. Our unmatched team of developers has created a real estate value worth $2 billion around Chicago.
We understand that investment, zoning regulations, and development are difficult to navigate. We invite you to partner with a company that has experience you can trust: DAC Developments.
For more information on the best types of real estate investment for you, contact us at DAC Developments in Chicago, IL, today!