The real estate market in the United Kingdom is forever growing and is something that many investors are getting involved with. It is a great opportunity for a real estate investors to build wealth however, there are many different types of real estate. Whether you are new to real estate investment or experienced, it is still good to make yourself aware of the different types of real estate investment as they could align better with your financial goals and aspirations. Learning about the different types of real estate investment and investing with these types can help to diversify your portfolio and offer more financial stability.
What Are The Different Types of Real Estate Property Investment?
There are various types of investments that you can choose from with real estate and they offer different results. Furthermore, they will require different levels of management, so you need to find one that is suitable to you. Not to mention that they will require different skill sets from one another. Nevertheless, if investing in commercial property is a bit overwhelming for you, you can always consider a real estate investment company.
Different real estate investments include;
- Buy-to-Let Properties
- Residential real estate
- Commercial space
- Holiday lets (AirBnB)
- Student accommodation
- REITs
- Build to Rent Properties
If you are unsure what these are, let’s take a look at them in more detail.
Buy-to-Let Property Investment
One of the most common property investments is buy-to-let properties. This is essentially when an investor buys a property and then rents that property out for a monthly income. Sometimes, they will buy property that is much cheaper than the average property. They will then renovate and decorate the property so it can be rented out for a more expensive value. Additionally, this will be a different mortgage with the bank.
Residential Real Estate
Residential real estate is another type of investment property that allows the landlord to gain money from rental fees from the tenant. In this scenario, you have complete control over the property and are a landlord. The types of property that this includes are flats, maisonettes, multi-unit property and, single-family homes.
Commercial Real Estate
Commercial real estate is something else to consider however, this can be more expensive than the previous properties that were mentioned. Furthermore, these types of properties tend to have a longer lease term which offers more security to the landlord. Plus, you also have a much bigger rental yield from these properties as they are bigger in terms of square foot. Some of the different types of commercial real estate properties include shopping stores, office spaces, production plants warehouses, and any type of hospitality.
If you are choosing an office space, choose an area that has a lot of footfall and is easy to get to. Additionally, you need to ensure it is near a car park for the staff that will be working in the office. For example, there is a lot of parking in central London that is surrounded by offices and companies.
REITs
Up next are Real Estate Investment Trusts and these are essentially public real estate investment companies. They are listed on the stock exchange which allows traders to buy and sell the shares of those companies. This allows people to earn profits from real estate without being the direct landlord.
Not having direct ownership means you save the hassle of dealing with the tenant yourself. So how do you gain money from this? Well, depending on the number of shares you own, you can receive dividends from the company’s profits. Obviously, because you are putting less money into these REITs, the returns will be much lower compared to when you own the property. Nevertheless, you can still earn a good amount of money through dividends.
Student Accommodation
Student accommodation is another great way to earn a rental income per month or quarter. With student accommodation, it can generate a lot of revenue and tenants are only living in it for three quarters of the year. They are technically residential properties but they are based near universities and colleges.
One of the issues with student accommodation is that it requires good management and pretty much 24/7 management. This can be costly however, if you are capable of doing it yourself then this wouldn’t be too bad in terms of cost.
To Conclude
There are many things to consider when purchasing real estate and there are many different types of properties that can be purchased. Additionally, these would require different levels of management so if you have a management team, you will be able to get that sorted relatively easily however, if you need to hire a management team, this is where costs can increase.
