Types of Real Estate That Make the Most Money

Real estate has always been amongst the favorite avenues for investment due to the long-term profitability of the investment and the cumulative wealth it generates. However, all investments in real estate do not yield the same return on investment. Knowing what kind of real estate yields more profit will go a long way in helping investors reach wiser decisions. Among the most profitable types of real estate, we review residential, commercial, and industrial real estates in this blog, plus many other types that are kind of specialized.

1. Residential Real Estate:

Residential real estate is property used for habitation; examples include but are not limited to a single-family home, apartment complex, condo, and even a vacation rental. The sector presents enormous opportunity to investors due to the key property types that yield substantial income.

Single-Family Rentals
Single-family homes are synonymous with real estate investing and can be among the highest return-on-investment types of properties, especially if one is in high-demand areas. If done right, rental income that comes from single-family homes can be super consistent. Because of a long-term renting profile and management costs lower in comparison to multi-family properties, rentals of single families are in demand both for new and for seasoned investors.

Multi-Family Properties
Generally speaking, multi-family real estate investments, such as two-unit houses and apartment buildings, are more rewarding compared to single-family rentals because the former realize economies of scale. Probably one of the major advantages that come with multi-family property is that it can realize income from more than one tenant at a time, something that offers better protection against vacancy risk. The initial investment in such property is usually more, their return is bigger too.

Short-term vacation rentals: the concept of short-term vacation rentals made so well known by services such as Airbnb and Vrbo. Because these are generally set up in tourist-heavy areas, revenues can be huge due to high nightly rates. Other than the management of short-term rentals being extremely time-consuming, a number of cities regulate it, too, which cuts into their profitability. But nonetheless, vacation rentals can be super profitable on the right markets.

2. Commercial Property
The commercial property would include office buildings, retail, and industrial properties. They require larger upfront investments, but definitely higher returns later.
Offices
Investment in office space can be very lucrative, especially in city centers or growing business districts. This usually ensures long-term leasing of office space, hence assuring a definite stream of revenue. Companies are downsizing, and hybrid models of working are gaining momentum; hence, the demands for office space might be readjusting. If strategically placed and targeting the key industries, it does provide avenues to increase profit margins.

Retail Properties
Other retail properties include shopping malls, strip malls, and single-entity retail buildings. Most investors are a little leery about investing in retail with so many people these days using the Internet for purchases. However, brick-and-mortar stores can be huge revenue if it is in high demand. Many niche retailers do quite well along with restaurants and service-based businesses like salons and gyms. To retail property investors, the location is everything; think major roads and dense populations if they want sizeable returns.

Industrial Properties: These are those properties concerning warehouses, distribution centers, manufacturing facilities, amongst others for industrial purposes. There has been a high demand for industrial properties because of the rise in e-commerce, especially warehouses that concern the distribution and storage of products. It is also one of the highest paying industries in the last years beside logistics, shipping and supply chain businesses. As an investment in industrial properties, investors may have long-term tenants and low maintenance cost which may be a good deal.

3. Mixed-Use Developments
A mixed-use property is one that involves a mix of residential, commercial space, and even industrial elements in one property. Therefore, an investor can diversify his streams of income through generation from rents out of the different types of tenants. For instance, the bottom part of the building may house shops, while succeeding levels may have offices and apartments above them. The flexibility within a mixed-use property reduces risk and mostly brings with itself a higher occupancy rate.

4. Raw Land
These are not as attractive to the investor as an investment vehicle since raw land does not currently generate any income. If it can be identified as one that will be developed in the near future, raw land nonetheless can be a very lucrative investment. In many instances, when metropolitan areas are in periods of growth the surrounding areas realize significant increases in their land values. It could be held and then resold to developers once the value has increased, or it could be sold directly to developers for profit.

Agricultural Land
Other forms of investment in land include agricultural land, or what is more colloquially referred to as farmland. Agricultural land in high-demand farming areas ensures profit either through renting to farmers or selling crops. Farmland has long provided steady returns on investments in those parts of the country where farming can be viably achieved.

5. Real Estate Investment Trusts (REITs)
REITs are a lucrative option to earn through real estate investment sans liabilities on the part of the property owner. Real Estate Investment Trusts are corporations that own, operate, or finance income-producing real estate across the commercial, residential, and industrial sectors. A person can share dividends from profits accrued in real estate through investment in shares of a REIT, without attending to responsibilities concerning property management. By definition, all REITs have high liquidity; meaning investors can buy and sell shares in the trust easily, as they would not have had with a traditional real estate investment.

6. Specialized Real Estate Investments
A few specialized or niche markets within real estate represent higher profit opportunities. While these markets may be out of the reach of every investor, they will prove very lucrative where done correctly.

Student Housing
Student housing is categorized as residential property under the sub-niche targeting college and university students. When it is set near the campus, it becomes one of the highest demands for property; thus, highly profitable. Students change locations often, but leasing per bed and strict lease terms assist in continuing business profitably .
 
Senior Housing
With the growth in population going into their old age, the demand for senior housing has been on the rise. Talking about high occupancy rate assisted living facilities or independent living communities, the leases for them are long-term by the investors in senior housing. Management cost is higher as compared to other types; however, the possible returns justify the cost.

Mobile Home Parks
They are affordable housing, and they allow the investor the opportunity to create some passive income by renting lots. Tenants of mobile homes usually own their homes and only rent the ground on which they sit; therefore, the cost of property management is normally lower compared to other residential real estate investments. In the right market, a mobile home park will have the potential to provide strong and constant returns.