What are the different types of real estate investment options?

The real estate market has diversity when it comes to investment opportunities. As a beginner, it’s best to research all the investment options available in the market. The real estate market is divided into three main categories; Residential Properties, Commercial Properties, and Vacant Land Properties. These three categories are further divided into several subsections.

Residential Properties

This category of real estate properties consists of residential properties for one or more people, mostly families, or small groups of individuals. Residential properties are of two types; rental properties or properties for sale. Both rental properties and for-sale properties are the same.

Within the residential real estate category, there are single-family homes multi-family homes, apartments, mobile homes, villas, huts, and several other types of housing units.

Single-family homes are housing units built to accommodate a single-family while multi-family homes are Housing units with 2 or more portions to accommodate 2 or more families. Apartments are basically large housing complexes made up of separate units. Apartments can be rented and owned and apartments can be of 1 room, 2 rooms, 3 rooms, and some apartment complexes even have 4 rooms. Individual mobile homes are small portable homes that can be attached to the back of an individual’s car.

Investing in residential real estate is the best option for first-time investments due to the low cost of residential property as compared to commercial properties. Most first-time investors prefer investing in residential properties because there is a lower chance of facing losses while investing in commercial property as a first-time investment is a very big risk. In Pakistan, most people prefer investing in a residential property that they later rent out. This serves as a means of generating a stable cash flow

Commercial Properties

Commercial real estate or CRE for short refers to commercial buildings such as malls, retail shops, hospitals, etc. This category of real estate is the second most popular investment option in the market. Unlike residential properties, commercial properties are mostly rented out and are used for the operation of all sorts of businesses.

This category is further divided into many subcategories. Some of them include hotels, retail businesses, offices, health care institutions such as hospitals, special purpose buildings (car washes), and many more.

Hotels and lodges can be large or small housing complexes depending on the location. Retail commercial properties are basically places where one can purchase goods. Retail properties include shopping malls, grocery stores, individual shops, etc. Health care properties consist of hospitals, clinics, senior centers, and pharmacies while the special properties usually consist of museums, places of worship and carwashes, etc.

Industrial properties are also considered a part of the commercial real estate category. Industrial properties consist of any business that needs a large open space such as factories, warehouses data centers, etc.

Commercial real estate properties are expensive as compared to residential properties or vacant lands. For first-time investors, making an investment in the commercial sector can be risky and cost-inefficient. If the investor is not sure where to invest in the commercial sector, the investor should do thorough research and then make the investment decision. It’s better to self-research rather than depend on other investors as everyone has their own investment perspectives.

Vacant land Properties

The third and last category of the real estate market are the Vacant land properties. This category of the real estate market includes farmhouses, ranches as well as vacant that that is yet to be developed or constructed on. This category of real estate investment is oftentimes referred to as Raw Land Investment and also includes raw material mines such as minerals.

As compared to both commercial and residential properties, investing in vacant land is the cheapest real estate investment one can make. The prices of the land vary on several factors such as the size of the property, the location, and the purpose of use.

For beginners, the best investment option is to invest in vacant land. There are fewer chances of facing loss and they are cheaper as compared to residential or commercial investment options.