When it comes to investing money, real estate seems to be
one of the most popular industries among majority of people. The reason is that
real estate industry has all the potential to provide bigger profits in return
of the investments made. There may be some risks involved but the amount of
profits is something which tends to remain quite attractive for potential
investors.
When we talk about investing in real estate, it’s not one
area in which the investments can be made. Real estate is a vast industry which
has a number of disciplines. Hence, the business rules for one area may differ
entirely as compared to the others. Having that said, it is worth mentioning
that there are different ways you can invest in real estate. Some fundamental
ones are mentioned as under.
Residential real
estate
This category involves investment in the properties such as
houses, apartments, vacation houses, and townhouses. Majority of investments in
this category involve buy-and-hold properties which the landlords rent out to
the tenants. In United States, most of the lease or rental agreements are made
on 12-month basis.
Commercial real
estate
This type of investments usually involves properties such as
office building and skyscrapers. With this investment, you can purchase or
build a small building with multiple office sections in a commercial area. This
building attracts small business owners and a number of companies. They enter
into a lease agreement with you and pay the rent. The lease agreements in this
scenario are usually long-term. The benefit of long-term agreements is that you
would get the amount of rent as per the lease agreement even if the market
rates drop. Thus, it is more stable kind of investment you can make. On the other
hand, you wouldn’t be able to raise your rent if rent rates rise in your area
as you will need to stick with the old agreement.
Industrial real
estate
This kind of investment can help you generate revenue in two
ways. You can either invite other people to enter into the lease agreement,
which is going to allow those people to operate the area according to their
business requirements, or you can use this area to do the business on
industrial level by yourself. For instance, you can open a warehouse or storage
unit. The revenue generated from this investment is even more stable as
compared to commercial real estate. However, you will need to do fair amount of
research before investing.
Retail real estate
You can invest money to build or purchase retail stores or
shopping malls. In many cases, the landlords and retail store runners agree
upon the share of profit to be paid to the landlord.
