If you’re looking to invest in real estate, you need to know what your options are. Making the right choice in terms of the kind of real estate you invest in could mean the difference between making a profit or struggling to see a return. What kind of property you choose to invest in is also dependent on your needs and wants.
Here are the main options you have when it comes to real estate.
Residential Property
This real estate category includes the main properties outlined as residential, therefore apartments and houses. It doesn’t just mean buying a home for yourself and hoping that it will accrue profit before you come to sell. Profit can be made from residential living in a variety of ways, including:
- Buying a home and maintaining it until it increases in value
- Buying a home and renting it out to a tenant until the property increases in value
- Buying a home and renting it out to a tenant or tenants for the foreseeable future
- Buying a large property with a number of rooms and living in the property whilst renting out the other rooms to tenants
A popular strategy is Buy-to-Let – purchasing a property to let it out to tenants.
In a nutshell, this involves:
- An investor purchasing a property either through a property investment company, UK-based RWinvest, for example, or an estate agent,
- Finding a tenant who will agree to pay regular monthly rental instalments,
- Making a monthly return on investment through rental payments.
Investment in a Residential Property Abroad
Investing in property abroad may be done for a variety of reasons. It could be that you fully intend to move into the property as your long-term residence, or you’re looking to have a vacation property which you can stay in from time to time, and let out to holidaymakers during the seasons which you are not using it. If the latter, you are looking at a good investment opportunity in terms of making your money back based on the rent you earn from vacation tenants, and if you choose a property in a popular tourist location such as Estepona villas then your chance of return may increase.
Commercial Real Estate
This is an investment in property which is used for business purposes, such as a store or office space. You can purchase a commercial property and then rent it out to those business owners who need a space to run their business from, or else to use as a public store to sell their goods.
Investing in commercial property compared to residential property, however, is more expensive, and it also requires a different method of acquiring the property, such as needing an extensive lease agreement rather than simply being able to buy the property like you would residential real estate. You would also need a brilliant credit history.
The business owner who takes over the property and runs their business from within it will also have an effect on how much the property is worth
Land
Land can be a great investment, but also a risky one. This is due to you not only starting from scratch in order to build a property to gain a return, but also because you will be paying taxes regardless of whether property is yet standing on it.
You will have a lot more to consider with land than you would with residential property, which includes environmental issues and gaining access to general property needs, such as utilities.
Securing an ample return when investing in land means trying to invest in the ideal spot for future development opportunities.