06 November 2010

Basic Types of Real Estate Investments: Residential, Commercial, Retail, Industrial, Trusts, Mixed-use

The process of a real estate investing involves purchasing, owning, renting, managing or selling of real estate properties. The motivations of real estate investing are leveraging, cash flow, and capital appreciation. However, one should always remember that the fundamental rule to succeed in real estate investing is buying a good property at good location with a low price. Good property denotes the quality of the property. Good location represents the future prospect of the property. And finally, low price will always ensure the investor has enough safe margin and avoid to be a victim from bubble property. Therefore, investors should do their homework seriously, investigate and compare the property with others, before making any decision in real estate investing. Besides, it is a good idea to understand the six basic types of real estate investments as shown in this post.

1. Investment Trusts of Real Estate
Real estate investment trusts (REITs) is one kind of stocks in major exchanges. In other words, investors can invest real estate through buying or selling the REITs securities in stock market. Generally, when a corporate entity that belongs to this type of real estate investment, a particular tax designation is granted, which decreases or completely eliminates that company’s corporate income tax. In return, the company should distribute 90% of their income to its investors. In these cases, however, the distributed income may be subject to tax.

2. Residential Real Estate Investment
Generally, the return of this kind of investment is through renting or leasing houses, apartment complexes, vacation homes or townhouses to families or an individual person besides the capital appreciating,

3. Commercial Real Estate Investment
Typically, commercial real estate investment involves investing in the construction of a commercial building that will house several offices and work spaces which can be leased out to anyone who want to use of the property such as companies and organizations.

4. Retail real estate investments
In retail real estate investment such as shopping malls and other retail venues, the landlord can rent out spaces to businesses and retail enterprises. Besides, in some cases, the landlord is also given a percentage of the sales generated by the tenant of the rented space.

5. Industrial real estate investment
Industrial real estate investments, such as factories, warehouses, storage units, garages, car washes or any other industrial properties, usually charges additional fees for the use of property facilities.

6. Mixed-use Real Estate Investment
By combining other types of real estate investments to be a single investment project, mixed-use real estate investment helps investors to control and reduce risks via diversifying their portfolio. For example, an investor with large capital have an option to establish a small town equipped a variety of properties. These properties could then be leased out to interested tenants such as retail shops, office spaces, warehouses and apartment buildings in that same town.

Since different types of real estate investments will give different opportunities to investors to suit their needs and purposes. After briefing some types of basic real estate investment, I hope you can make the right real estate investment for you. That's all for today. Feel free to give me a comment about this topic or any suggestion about Xaivier Blog. It will be a great support to Xaivier Blog.

Review by: Xaivier Chia


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