Personal Finances

Types of Real Estate Properties and How to Invest in Them

If you’re looking to invest in real estate, you may be overwhelmed. Currently, there are over 48 million rental units in the US, owned by private investors, and they all follow different structures.

However, if there’s one tried-and-true investment in the world, it’s real estate. You just need to know the different types of real estate properties to choose from, and luckily, we can help with that!

Types of Real Estate Properties

If you’re looking to invest in real estate, your options fall under the categories of residential property and commercial real estate. Commercial real estate may have residents in them, but they have multiple units.

Conversely, a residential property may have one unit or four. Difference states have different regulations about what constitutes “commercial property,” but a two-unit is generally considered a residential building.

In most cases, once you have more than four units, it will be considered a commercial property. Three or four-unit buildings will still be considered residential properties in most cases.

How to Invest in Single or Multi-Family Homes

If you’re planning to invest in a single-unit or multi-family house, then you’d be surprised how easy that is to do. Generally, you only need 15% to put down, even for a fixer-upper.

If you’re handy and willing to put in a little work, you can flip a single-family house and sell it for profit or rent it out yourself. In most cases, flipping a multi-unit will be more lucrative to rent out yourself than to sell immediately.

Now, you can also buy a house that’s in good shape and currently occupied by tenants, known as “turnkey” investing.

Remember, the neighborhood where you buy and the property itself are both critical to your success. If you buy an old property and aren’t prepared for a major expense, you could be in trouble if the roof collapses.

Moreover, the same logic applies if you buy a building in a neighborhood that’s going downhill. Always research the property thoroughly before purchasing.

How to Invest in Commercial Properties

Generally speaking, investing in commercial properties costs a lot of money upfront. You’ll need commercial construction loans that will finance the project as it gets costly.  Unless you’re an experienced builder,  we would only suggest buying a turnkey building. The reason for this is that putting money into rehabilitating such a large building and finding tenants to occupy every unit is very costly upfront.

Of course, so is buying a turnkey property. The difference is that you will begin earning immediately, and if most of the units are already occupied, then your income should skyrocket within the first month.

Now, not many investors have that kind of money to spend on a down payment right away. However, with Kiavi rental loans, you may be able to bridge the gap to afford these larger cash cows, whether you’re looking at three units or one hundred.

Start Investing Today

Now that you know the different types of real estate properties, why wait? Look around today, invest, and start earning right away. From there, stay up to date with our blog for our latest financial tips and enjoy your new income!


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