What Is Real Estate Investment?

Definition of "What is real estate investment?"

Pamela Watkins real estate agent

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Pamela Watkinselite badge icon

Dalton Wade Real Estate

There's a prevailing misconception that real estate investments are money-making machines that don't require any significant input. Reality couldn't be further from this, so let’s look further into what real estate investment is. Whether residential or commercial, investing in real estate property must be well thought out, carefully planned, and meticulously put into practice. 

Disclaimer

Before investing, the best course of action is to contact the experts and find a real estate agent, a real estate attorney, and a lending institution's representative. In addition, inform yourself about upcoming real estate market trends. Therefore, you can form an educated opinion and won't expose yourself to the dangers of going bankrupt.

What does an investment property mean?

Getting into investment properties means you buy a real estate asset as an investment that will generate income instead of using the said property as an actual home. The underlining principle is purchasing a real estate investment property for a specific amount. Then, you either sell it for a higher sum than you initially bought or rent it as a unit.

According to the traditional interpretation, the best investment properties refer to buildings, lands, or any other tangible yet immovable valuables that can be transferred from one owner to another. However, a new definition of real estate investment property has surfaced, tailored to the modern age.

We know how technological advancements raise many questions. Technology reshaped many industries, for example, real estate, resulting in the emergence of digital properties on the market. Do you know how to buy digital real estate using digital tokens?

What types of investment properties are there?

Placing your bet on the most profitable real estate investment takes time and effort. Let us look at the different types of rental properties you can choose to invest in! 

Residential real estate properties to rent

You can invest your money in residential real estate with various homes, such as duplexes, townhomes, bungalows, single- or multi-family units, or new constructions. These were designed for residential purposes. 

Renting out a residential property makes you a part- or full-time landlord with all its responsibilities. Tenants can provide you with a substantial secondary income or pay the mortgage on your second home. In order to find a financially reliable long-term lodger, we suggest you organize tenant screenings

Another popular residential real estate rental is second homes transformed into short-term rentals, such as beachfront condos, vacation lodges, log cabins, and Airbnb. New York and Florida are among the best markets for residential real estate investments in the United States.

Commercial real estate investment properties

There's no use sugarcoating this; getting into the commercial real estate world is almost only possible for beginners with a substantial budget. Commercial real estate stands for office buildings separated into smaller units in a complex. Suppose you're fascinated with dipping your toes into this sort of investment. Then, contact local realtors with experience in commercial properties as a real estate niche!

Industrial real estate

Industrial properties refer to large-scale assets used to build warehouses, mills, distribution centers, plants, works, and factories. For example, you can track and purchase vacant lots and buildings close to a major American city and use it as a money-making warehouse. Simultaneously, you can turn a warehouse into a loft living space and lease it for rehearsals or events.

Should you consider real estate investments for house-flipping?

Suppose you want to avoid the hassle of renting out a property. In that case, you can opt for house flipping. In other words, you buy a low-cost asset, give it a facelift, and sell it for a profit. However, before flipping your first home, you should know its potential disadvantages, such as unforeseen repair and interior and exterior design expenses. Holding onto the property because it would sell under market price will incur additional costs.

Conclusion

Real estate investments require knowledge of the market, when and where it's worth buying, selling, or renting out an asset. If you need more clarification about skills, budget, and knowledge, reach out to licensed local realtors. They can show you which direction you should take.

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