Real estate in a country is one of the oldest and most traditional asset classes. Many new investors in real estate know that, but what they do not know is how many different kinds of real estate investments exist.
Each kind of real estate investment has its potential advantages and pitfalls. Such as unique quirks in cycles of cash flow, lending traditions, and standards of what is appropriate or reasonable. So, you should study them entirely before you start adding them to your portfolio.
As you read these different types of real estate investments and learn more about them, it is not unusual to see someone build a fortune by learning to specialize at a particular time.
Types of Real Estate Investments
If you are intent on owning, developing, acquiring, or flipping real estate, you better come to an understanding of the characteristics of the property, by dividing the real estate into specific categories.
Residential Real Estate Investment
Residential structures are properties such as townhouses, individual houses, apartment buildings, and vacation homes where a person or family friends pay you to live in the property. The time of their stay is based upon the rental agreements, or the contracts they sign with you, known as the lease agreements. The majority of residential leases are on a twelve-month basis in Real estate Pakistan.
Moreover, it includes both previously constructed homes that are up for sale again and newly built constructions. In residential homes, the most common category is single-family homes – can be a single room or multiple. Such as Giga Group’s latest Goldcrest Views project. Moreover, residential real estate also includes guest houses, condominiums, high-value homes, co-opts, and vacation homes. The length of a user’s stay depends on the kind of agreement between two parties.
Some residential real estate projects for investment in Islamabad are:
- Goldcrest Views (Booking Open & Construction Work In Full Swing)
- Goldcrest Highlife (Booking Closed & Construction Work In Final Phase)
- Goldcrest Vacation Homes (Booking Open & Construction Work In Progress)
- Central Palace Residence (Booking Open & Construction Work In Progress)
- Defence Executive Apartments (Delivered and Completed)
- Lignum Tower (Delivered & Completed)
- Defence Residency (Delivered & Completed)
Commercial Real Estate Investment
Commercial real estate includes shopping malls, office buildings, skyscrapers, retail centers, educational, and medical buildings. Apartment buildings, Hostels, and motels are also commercial real estate even though they are used for residential purposes. The reason is, these buildings generate a passive income for the owner. If you want to utilize your money in constructing a small building with offices, that is an excellent regular income idea. This is because you could rent the offices out to small or medium-sized business owners or companies, who would compensate you with sufficient rent regularly for using the property.
It is not unusual for commercial real estate to involve multi-year leases. Owners can lease our commercial buildings to small business owners and companies who like to rent out the property for a particular period. Sometimes the commercial leases are for multiple years. This leads to higher cash flow safety even at times when rental property prices are going down. However, if commercial rates go up, in that scenario, the lease agreement cannot be revised. Thus incurring damages.
This can point to greater stability in cash flow, and even protect the owner when rental rates decline. Still, if the market goes up and rental rates increase considerably over a short period, it might not be possible to take part as the office building is locked into past agreements. This type of property investment in Pakistan is quite common and beneficial.
Some commercial real estate projects for investment in Islamabad are:
- Giga Mall Extension (Booking Open & Construction Process In Full Swing)
- Town Center Commercial (Booking Open & Construction Process In Full Swing)
- D-Mall (Booking Closed & Construction Complete, Finishing In Progress)
- WTC Offices, Corporate Floor, Giga Mall Islamabad (Booking Open, Work Complete)
Industrial Real Estate Investment
The third type of real estate is industrial real estate. It includes manufacturing buildings, warehouses, and large-scale product stores. It also includes car washes, storage units, and other specific purposes real estate that produce sales from customers who provisionally use the facility.
These investments usually have significant fees and service revenue streams. These buildings are often used for the production, storage, research, and long-distance distribution of manufactured goods. It should also be noted that some buildings that distribute manufactured goods are classified as commercial buildings. The classification is significant because construction, zoning, and sales are handled in different ways for both types. Industrial real estate leases are, for the most extended terms, some extending to as much as 99 years in Pakistan.
Retail Real Estate Investment
Retail properties consist of shopping malls and other types of retail storefronts. In many cases, the landlord also receives some percentage of sales generated by the renter store, plus a base rent to incentivize them to keep the property in perfect condition.
Mixed-Use Real Estate
These properties combine multiple aspects of the above-mentioned categories into one. In the words of Mr. Najeeb Pardesi, the Vice Chairman of the Giga Group, “mixed real estate properties offer the most returns because of their versatility.” Though considered a bit risky, mixed-use real estate properties are suitable for those who have Signiant assets beforehand to reduce the risks associated with such an investment.
Consider, for example, an investor in Karachi who took several million dollars in savings and found a mid-size town. He went to a bank for financing and built a mixed-use four-story office building surrounded by retail shops. The bank, which granted him the money, took out a lease on the first floor, producing significant rental income for the owner. The rest of the levels were leased to companies and other businesses. He can then lease out the surrounding area to a gym, restaurant, an upscale retail shop, and a hair salon.
Raw land investing and new construction describe two different types of real estate investment that can assist in diversifying an investor’s portfolio. Raw land points to any free land available for purchase and is most attractive in markets with high growth. New construction is not much different, though, properties have already been on the land. Investing in new development is also common in quickly growing markets.
While many investors may be unknown with new construction and raw land investing, these investment models can represent engaging profits for investors. Whether you want to build a property from start to finish or profit from a long-term buy and hold, new construction and raw land provide a unique opportunity for real estate investors.
To maximize gains when investing in new construction and raw land, investors should complete comprehensive market research. This will assure you to choose a desirable area and will also restrict the investment from being hindered by market factors. Land Investment includes working farms, property ranches, and vacant land. There are various subcategories under vacant land that include underdeveloped, reuse, or early development, site assembly, and subdivision.
What is the Best type of Real Estate Investment?
The best type of real estate investment will depend on your circumstances, market area, goals, and preferred investing strategy. While many investors want a more direct answer, determining the most suitable type of investment property is a subjective process. Choosing the right property model comes down to weighing the advantages and disadvantages of each option, though there are several key factors investors should keep in mind as they explore the best choice.
When deciding on the best type of investment property, you cannot underestimate the importance of location. Investors operating in “up-and-coming” markets may find success with new construction or vacant land, while investors working in more “mature” markets may want to invest in residential or commercial properties.
Apart from location, investors should know their own choices when it comes to investing. Evaluate your preferred level of involvement, profitability, and risk tolerance as you decide which property type to invest in. Investors wanting to take on a more passive role may opt to buy and hold residential or commercial properties and hire a property manager. Those wishing to take on a more active role, on the other hand, may find developing vacant land or rehabbing residential homes to be more fulfilling.
As you pick the best type of investment property for you, it is also essential to bear in mind that many investors find success investing in a variety of property types. It is not unusual for investors to familiarize themselves with the residential real estate market before moving on to commercial properties, for instance. There is no reason investors cannot achieve success by investing in various property types.
We hope now you understand the different types of real estate investments and are in a much better place to choose one that suits you most. Thank you for reading.