Which are the best types of properties for real estate investing?
With the U.S. real estate market on the verge of recovery, investors are increasingly looking into new niches and property sectors. In hopes of finding great investment opportunities, investors are sifting through every type of available property to see what can make them a profit. So which sectors and properties are the best move for investors today?
Being a little late to the rebound party than residential properties, commercial real estate is gathering a lot of attention. This is especially true of big retail moves in the media. All types of commercial property can be a good investment. Many investors will find venturing into industrial, office, retail, hospitality and multifamily projects a natural extension of what they have been doing, especially for those with a big focus on improving their local communities. Of course, many will find the leap more of a distraction and the learning curve less than profitable than simply sticking with investing in homes.
In contrast, residential real estate is a much more comfortable spot for most individuals and the simplicity can make it a lot easier to turn profits consistently. Of course, there are many different residential real estate investing strategies to deploy, different levels of competition in different markets, and what may be right for one investor may not be best for the next.
Let’s look at a few of the options available:
With renewed confidence and a bright outlook for the market, new construction appears to be appealing again. The shine and new home smell can be alluring. However, getting into pre-construction can have its dangers. The loss of returns during the building period requires speculation as to value and ability to rent and can be hampered by not being in mature neighborhoods.
Then there are hot and coveted foreclosures. Despite numerous proclamations in the news that foreclosures are vanishing, data from RealtyTrac continues to show spikes in activity around the country. Years of back-logged foreclosures, increased motivation for banks to repossess, and big private equity could leave even more foreclosures up for grabs in the coming months.
New foreclosure listings, short sales and new additions to the MLS can all offer sources for real estate investing deals. As the housing market continues to heat up, sources like the MLS could become even more valuable for both cash flow investors and those flipping houses.
However, for now, many real estate investors may actually find their sweet spot in aged MLS listings and FSBOs. There is actually a huge glut of these properties rotting on the market off the radar of the majority of home buyers and investors. Some simply suffer from poor or almost non-existent marketing, while others were seriously overpriced when listed and the motivation to actually strike a deal was a lot lower.
Now that values have nudged up a bit, properties can be sold a lot faster if marketed right. Many of these property owners are now beyond desperate to liquidate, or at least should be. Those that hone in on these properties can find them to be a gold mine.
Finally, many real estate investors may find that they have been going to extreme lengths, hassle and expense to find rental property deals. There are many freshly rehabbed properties available from wholesalers at good prices. Many of these are already leased and cash flowing and may even come with pro property management in place.