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Types of Real Estate Investments

Real Estate is a massive sector leading to a significant contribution to the GDP. Even if we look into the statistics, the Real Estate department alone is expected to contribute around 13% by 2025, and by the year 2040, the same sector is expected to reach a market width of about $9.3 billion, according to a report published by Propacity. The reasons behind this can be many such as urbanization enhancing Healthcare, rising needs of office spaces, increased job goers and students, etc. The more the need, the more the opportunities are rising for Investment purposes. 

With investment, the first thing that pops up in our minds is Real Estate Investment Property. Yes, considering how every sector, commercial as well as residential, requires a real estate property, it is enough to say that investing in the real estate sector is worth it. So have you ever wondered what are the types of Real Estate Investments? Let us discuss in detail the types of real estate investments in this article.

Why Should One Invest in Real Estate?

Before we discuss the types of real estate Investments, let us first discuss why one should invest in real estate properties and how one can generate a huge amount of money. 

  • Heightened Transparency and Liability- With the regulation of the RERA Act, people can now witness improved transparency while buying any property. The establishment of this act has allowed investors to scrutinize every step minutely and account the authorities for after-sales liabilities, etc. This, with time, the real estate sector is growing in favor of the clients or customers.
  • Foreign Direct Investment- FDI in the Indian real estate industry follows the provisions of the RBI Circular 2005, the Exchange Rate Management Rules 2000, and the FDI Policy of the Ministry of Trade and Industry Development. The current standard provides 100% FDI (under certain conditions) via automated routes in the built infrastructure, residential, real estate brokerage, urban, and construction sectors. This is very advantageous in the long run such as it will create numerous employment opportunities.
  •  Extra Income- Property investment in India enables a good extra source of income due to rental yields or leased-out properties. The investigates regular and periodic side income by investing in commercial real estate properties.
  • Easy Financing- Financing in the Real Estate property is easier as compared to the stock market that requires a hundred percent prepayment with no installments or loan availability. This is not the case of real estate investment, here one can give some token amount and avail the rest from the bank through a loan. This is beneficial for the middle-class sector and people with limited sources of income per month.

Types of Real Estate Investments​

The above discussion has already highlighted the benefits of investing in real estate properties. Now let us discuss the types of real estate Investments with their benefits.

  • Residential Real Estate Investment

Residential real estate investment refers to the places where people occupy the space to live and reside. Be it a condominium or studio apartments to flats with 'n' BHK to the whole Villa, residential real estate investment options are everywhere and needed by everyone. One can lease out or purchase a property and get a good source of stable rental income. 

Another way of earning money through residential properties is by allowing travelers to stay at the property through various online booking sites. In this way, the owner/investor does not have to worry about the monthly rental income as the pay is on a per-night basis and very high. However, this source of income has its cons like cleanliness, furnishings, etc. Nonetheless, to reap the benefits one has to work hard towards it.

  • Real Estate Mutual Funds

Real estate Mutual Funds are types of investments that are done in the securities of Real Estate companies. A major part of these funds is invested in commercial properties, residential properties, and/or agricultural lands. Real Estate Mutual Funds investors can invest in any type of property, directly or indirectly through Real Estate Investment Trusts (REITs). 

It is a great option for those who have liquidity or liquid cash. However, with great options come great risks. REMFs are subjected to market risks and the diversification in the market can lead to higher risks. 

  • Commercial Real Estate Investment

Commercial real estate investment refer to the type of investment in commercial properties such as offices, shops, malls, co-working spaces, hospitals, etc. This is a wonderful investment property that ensures a monthly rental income. 

Even though this type of investment is very fruitful in the long run, one should look into some things in detail such as thorough market research, the decision should be wise, and planning of the finances in advance. This will help you in making a prudent decision and not falling prey to peer pressure. 

  • Fractional Property Investment

This is a sub-part of Commercial Real Estate Investment and consists of a group of investors coming together to invest in the common property. The rental income is also divided among the investors in their shared ratio. This is a great opportunity for middle-class people or people with limited sources of income who are aspiring to invest in a commercial property.

Also, it allows people to buy high-end and premium commercial real estate properties which otherwise would have been difficult for the individual buyers. Besides all of these, there are no market risks associated with these kinds of properties, so one can invest and take off the shares as and when required without letting the stock market affect them. 

So, these were some types of real estate investments that one can look forward to buying and investing in to get huge paybacks. Depending upon the individual's requirements and priorities, one can look for any type of property and invest in the same. 

About the Author: Yield Asset

Yield Assets is one of the best commercial property investment companies that provides the best real estate investment platform. Investing in pre-leased commercial property is one of the best investments that one can rely upon.

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