Investing in real estate can be extremely profitable. If you know what you’re doing, you can expect predictable cash flow, excellent returns, and tax advantages. Thinking about investing in real estate? Here’s what you need to know about different types of real estate investment properties.
Long-term Rental Property
This type of investment property is bought to rent out to tenants. An investment property can be anything from an apartment to a multifamily home. You can earn money on a long-term rental property by rent, but also through appreciation if you eventually decide to sell it.
Vacation rentals are short-term rentals. This type of investment is popular in tourist destinations that experience a population boom during certain times of the year. Owning a vacation rental is a more involved investment, as you have to maintain the upkeep of the property between rentals or outsource the cleaning that’s needed in-between tenants.
Flipping a home is an investment that is more involved and carries a lot more risk. You’re purchasing a fixer-upper home, making needed repairs, and putting it back on the market, but the cost of repairs can be expensive. You’re putting a lot of your own time into the project but will likely make a considerable profit after the sale.
Accessory Dwelling Units
ADUS are spare living spaces already on your property. Investing in an ADU is less expensive, so it’s a good option if you’re looking to receive a passive income on a property you’re already utilizing. Some people even opt to convert basements and sheds into additional living spaces to rent out.
Commercial Real Estate
Commercial real estate investments that are typically non-residential, such as office spaces or storefronts. While a public-facing space carries significantly more risk for damage, commercial real estate properties typically yield higher returns than residential rentals. More factors can speed up the appreciation of this kind of space. For example, renting to a successful business can result in a faster rate of appreciation of the space.
Investing in real estate can dramatically strengthen your net worth and increase your buying power. Investment properties offer cash flow, tax breaks, and competitive risk-adjusted returns. Want to learn more about real estate and investment properties? Contact us today!