Real Estate Investment Types: What You Should Know

Understanding the different real estate investment types can help you decide which approach may fit your goals, budget and level of involvement. From owning a rental property to investing through a REIT, each option comes with different costs, responsibilities and risks.

Here are some of the most common ways people invest in real estate.

Residential Rental Properties

Buying a condo, townhouse or house and renting it to a tenant is one of the most familiar forms of real estate investing.

Rental properties may provide ongoing income while giving the owner an opportunity to build equity over time. However, investors also need to consider mortgage costs, property taxes, insurance, maintenance, vacancies and property management.

Multi-Unit Properties

Duplexes, triplexes and other multi-unit properties can provide income from more than one rental unit.

In addition, changes to housing and zoning in BC have created new opportunities for small-scale multi-unit housing in many communities. Investors should still carefully consider construction costs, zoning, financing and potential rental income before moving forward.

Commercial Real Estate

Commercial real estate can include retail, office, industrial and mixed-use properties.

These investments work differently from residential properties and may involve longer leases, different financing requirements and additional operating costs. Therefore, understanding the property, location and potential tenant base is particularly important.

Fix-and-Sell Properties

Some investors purchase properties that need improvement, renovate them and then resell them.

However, renovation costs, financing, taxes, permits and changing market conditions can significantly affect whether a project is profitable. A realistic budget and understanding of the property’s potential resale value are essential before taking on a major renovation.

Real Estate Investment Trusts (REITs)

Not every real estate investment requires buying a property directly.

Real Estate Investment Trusts, or REITs, provide another way to invest in real estate. Rather than personally owning and managing a rental property, investors can purchase an interest in a trust that holds qualifying real estate assets.

As a result, REITs offer a very different approach from directly owning an investment property.

Choosing Between Real Estate Investment Types

The right real estate investment types to consider will depend on your finances, goals, experience and how actively you want to manage the investment.

Most importantly, look beyond the purchase price. Consider financing, taxes, maintenance, potential rental income, vacancies, location and your long-term plans.

If you’re considering an investment property in New Westminster, Burnaby, Coquitlam or elsewhere in Metro Vancouver, the Adam Lloyd Home Selling Team can help you understand local properties, neighbourhoods and potential opportunities.

Contact The Adam Lloyd Home Selling Team, we can help you understand what’s currently available, where the best value is and how to compete in this price range. Reach out anytime for a no-pressure conversation.

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