What’s the Best Real Estate Investment? A Look at Some of the Top Options

Townhouses on new suburban street

Real estate creates a wonderful investment opportunity. They can bring an income while you own it, and they almost always gain in value, which means you’ll likely have the chance to sell it for more than it was purchased.

Real estate investing is also interesting, as you have the chance to find unique properties, work deals, meet new people, and become far more involved in the overall process. The same really can’t be said about stock portfolios or retirement accounts, which only require you to deposit money, especially if it is managed by another party.

There are many reasons that experts and financial advisors recommend real estate as an investment. But there are numerous types; what’s the best real estate investment for your budget and goals?

By understanding the various options, you’ll be able to make the right choice for your financial future.

Find the Best Real Estate Investment: A Look at Your Options

Single-Family Homes: A Steady, Consistent Choice

Possibly the most common type of real estate investment, at least by total units, is single-family residential property. This type of property makes a foundation for the real estate industry, and it is a high-demand option that can bring a steady income to your portfolio.

Single family homes are a popular investment because they are highly desired by potential renters. If given the option, most people would prefer to live in a house that is occupied entirely by them and their families; not that having neighbors across the wall is always awful, but most people prefer the privacy and sense of security that comes from renting a single-family household.

Also, single-family homes tend to be more affordable than many other options, especially if they are smaller. So they create investment opportunities that are more attainable for a majority of buyers.

Duplexes and Multi-units: Spread the Risk of Vacancy

Multi-unit properties are also a popular option. Across the country, it’s likely that these are the second most-common type of real estate investments, especially if you lump duplexes, three-plexes, and four-plexes into one category.

One of the main advantages of owning a multiunit property is the fact that you decrease the risk of having 100% vacancy. Essentially, if you own a single-family home (one unit) that sits unoccupied, you are earning nothing; this is especially worrisome if the property is mortgaged. But if you own a duplex and one of the units is unoccupied, you are still earning 50% of the income potential. Basically, the chance of 100% vacancy is reduced, and the risk is further reduced if you have three or four units.

Foreclosures: Low Purchase Cost, Likely Needs Updates

A foreclosure property is a home where the previous owner was unable to make their payments, forcing the bank to seize the home and sell it on the open market, usually through an auction. Generally, the property is sold for whatever price the bank can get (they are more interested in moving the property quickly as opposed to getting a great price), so you can purchase a home far below its potential value.

However, foreclosed properties have their own set of problems. In many cases, they have been neglected from proper upkeep and maintenance, so while you can get a low price, you may have to invest a substantial amount in repairs.

Real Estate Groups: Enter into Real Estate with a Smaller Investment

Group meeting at a table. Shaking hands
Joining an investment group could be a low-cost option for starting a real-estate portfolio.

If you are interest in becoming a real estate investor, but you’re worried about the large investment in a single property, you could join a real estate investment group. Like mutual funds, where people “mutually” pool their money together to make investments, real estate groups combine their resources to purchase properties, then split the earnings among members.

You’ll have less control over the property, but groups allow you to become an investor in real estate without the substantial initial cost and the large potential risk. However, if you have a limited amount to invest, this can be the best real estate investment option.

Off-Market: Purchase a Home Before it is Listed

If you live in a hot market, one where homes are listed and sold at a rapid pace, it can be frustrating to search for your personal home, let alone find an investment property. To make a good investment, you need to buy low, but that can be hard when homes are barely on the market for a couple of days. Even duplexes and small homes, which make great investment properties, are hard to come by in this type of market.

But it is possible to be proactive and stay ahead of the market by finding homes before they are listed. Check with public records, auctions, and personal contacts to see if you can find homes before they are listed. In many cases, people will be happy to sell the property without having to go through the hassle of listing, hiring a seller’s agent, and many of the other small tasks that come with selling a property.

Commercial Property: High Investment, High Risk, High Chance of Profit

If you are willing to take on risk, and have the income to make a substantial investment, you could purchase real estate property, such as office space or retail outlets. These properties can bring a large income when occupied, but they are heavily dependent on the overall economy. Basically this is a high-risk, high-reward option, but it could be the best real estate investment if you are comfortable with the large investment

Reliable Loans for the Best Real Estate Investments

When you are ready to invest in real estate, let us help. By providing affordable loans that fit your budget and goals, we can increase your chances of long-term success. Contact our staff today to learn about potential options for your investment.

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