If you are starting to invest in Arlington Heights rental real estate, you may have perceived that there are various options out there. Rental property investors, primarily, have numerous choices as to property type, size, and function. If you’re not yet clear which type of rental property is appropriate for you, start by learning about the four main types of real estate and the purpose of each one. Then right after, narrow down your options until you know the right kind of rental real estate that fits your needs and goals.
Many new real estate investors thinking of purchasing select a residential rental property. Obviously, there may be an excellent reason for this: the residential real estate market is vast! In 2020, it was valued at $33.6 trillion and still increasing. By definition, residential real estate is purchased and occupied as a dwelling by owners or tenants.
Within this broad category of real estate, there are quite a lot of different kinds of residential properties: townhomes, duplexes, multi-family buildings, single-family residences, and more. Thanks to lifestyle and renter demographic changes, single-family rental properties have been in high demand for years. This makes investing in single-family properties one of the most commonly used options for new investors.
By comparison, commercial real estate is property used only as a workspace or to conduct a business or trade. As with residential properties, there are lots of different kinds of commercial properties. Office space, retailers, restaurants, hotels and resorts, and even healthcare facilities all fall under the category of commercial real estate.
There are quite a lot of benefits and advantages of investing in commercial real estate, as it can be a very excellent option for most investors. Though, the initial cost of a commercial property is sure to be much higher than a residential property, which can be a hard complication for first-time investors to go through.
Despite the fact that it’s technically part of the commercial real estate category, industrial real estate is a really unique type of real estate often designated for use in very specific ways. Examples of industrial real estate include car manufacturers, storage and distribution centers, food processing centers, power plants, and research and development parks.
There are additionally three different classes of industrial real estate – A, B, and C – so it’s imperative to do your research if you are taking into account investing. Leases on industrial properties can be very financially beneficial and have a tendency to be very long-term holdings. And, much the same as commercial real estate, it can be too costly to secure industrial property, primarily if such properties are in large demand.
The fourth and final type of investment property you should learn about is land investment. Most of the time, raw or vacant land is purchased with the main goal to develop it in any way or to use the natural resources on or under the land for profit.
For many investors who own land, this would involve offering leases that allow tenants to harvest minerals or water, oil or mining, timberland, orchards, or to use as farms, ranches, and recreational activities. Buying raw land, particularly, is an exceedingly speculative investment that carries an equally high degree of risk. Though in good circumstances, leasing land can be a financially beneficial strategy for a real estate investor.
With a whole lot of different options within reach, many real estate investors will go into one type or sub-category of real estate, choosing to specialize. This can be exactly good when you are just initiating the process because it takes time to grasp everything you need to ascertain about investing in each type of real estate.
If you are looking to start investing in residential rental properties, we can help! Our local Arlington Heights property management experts join and work with investors like you to help look for, prep, and lease quality residential rental homes. Contact us today to learn more.
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