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Six Property Types to Consider for Real Estate Investing
Posted By Ray On October 29, 2012 @ 6:08 AM In Investing,Real Estate | Comments Disabled
NOTE: this is a guest post from long time reader and subscriber, Ray. He has been investing in real estate as his career for over 20 years and has agreed to share a few of his experiences. Thanks Ray!
I read with great interest about Ron’s interest in real estate investment  and asked him to allow me to write a few articles on my experiences and the things I’ve learned while accumulating a relatively large real estate investment portfolio. I was fortunate to have discovered the importance of investing and the practice of avoiding high interest consumer debt when I was a sophomore in college back in 1990. In the middle of my junior year, I was able to convince my landlord, who owned two 4-plex apartment units, to sell them to me and hold the mortgage. He owned them free and clear (they were a college graduation “gift” from his very wealthy father). He had no interest in their management or in maximizing their value, so I swept in and made him an offer, couching it in the amount of headaches he would avoid.
He obviously took me up on my offer and I’ve never looked back from there!
When you begin your real estate investment career, after you get your personal finances in order, you’ll need to find a suitable piece of property. I personally concentrate on small apartment complexes and rental houses, mostly in college towns. I know I’ll always have a substantial market with those demographics.
Each type of property presents a unique set of features and responsibilities—from financial to personal—that the following sections explain.
Single-family homes are self-standing residences usually occupied by one paying tenant, which can be a person or a group, such as a family. In college markets, several unrelated students may be sharing a single family home. Single-family homes tend to increase in value more substantially than any other type of real estate investment for two reasons:
Bear in mind that should you decide to invest  in single family homes in a college market, you may or may not experience any significant depreciation but there will almost always be significant demand. Few upperclassmen want to live in a dorm.
But investors tend to buy property for income rather than just for price appreciation, so it’s important to consider these drawbacks about investing in single-family homes:
Multi-family homes (sometimes called duplexes, try-plexes, or quads) are self-standing residences occupied by two or more paying tenants, such as two individuals or families. Multi-family homes usually look like single-family homes but include two or more separate entrances to provide the tenants some degree of privacy. Investors should keep the following tips in mind when deciding whether to invest  in a multi-family home:
Apartments are individual housing units grouped together within a single building. They’re usually among the least desirable in traditional markets, and therefore the cheapest, housing option. In college markets like where I tend to invest , apartments are highly desirable by real estate investors. In some cases, investors can buy a single apartment within an apartment building or buy the entire building or the entire complex.
Condos and co-ops are usually like apartments in structure, but with slightly different ownership arrangements.
Commercial property includes office, retail, and industrial buildings. Investing in this type of property takes a little more know-how and is riskier than investing in residential real estate, mostly because the value and vacancy rates of commercial property are tied directly to the local economy , which can change quickly. If you’re just starting out in real estate investing, it’s probably best to begin with residential buildings.
Since investors can rarely rent raw (undeveloped) land, it’s crucial to buy land with a strong potential for price appreciation. Land most likely to rise in value is located in the path of progress—areas in which the population and local economy  seem poised for growth. As demand for housing and commercial buildings grows in that area, the value of your land will rise. Note that raw land tends to appreciate in value more slowly than property with existing buildings, so it’s crucial to have a long time horizon when investing in raw land.
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