Seasoned investors continue to take notice of real estate, and more new, potential investors are paying attention. In fact, real estate investment is a long-established method for hedging against inflation, diversifying your portfolio and creating multi-generation wealth. Investing in real estate can also offer a number of important tax advantages.
When you are considering a real estate investment, you typically have many choices and also decisions to make based upon your budget, your personal preferences, and often the financing options that are available. Gaining a good understanding of the different types of real estate and their comparative lending availability is vital. Here we outline some of the most common:
Single Family
Single family residential property can be defined as a detached residential structure designed as a single dwelling unit to accommodate one family or group of individuals living together and sharing the same living space.
Nearly all real estate investors start with single-family properties. They use it as a method of education and for income and equity-building before buying into other types of properties. As a new investor, single family properties can be an easier option due to both accessible and appealing mortgage choices and typically lower down payment requirements.
Residential Multi-Family (1-4 Units)
These can be defined as a single parcel of property designed and used for residential occupancy of between one to four households, such as a duplex (two units), triplex (three units) or quadruplex (four units). These multi-family properties are smaller scale and can often be managed by the investor easily.
In general, financing terms are similar to single family properties as they typically fall under residential lending guidelines, with similarly low down-payment terms available.
Large Multi-Family (5+ Units)
Simply put, these multi-family buildings are larger, with five or more units. They are considered commercial real estate properties, whether they are side-by-side, or stacked and may include apartment buildings, co-ops, townhomes, or condominiums.
Financing these larger properties may require a larger down payment, but mortgage approval may be easier since the ability to repay the loan isn’t dependent on the cash-flow derived from a single tenant.
Commercial (Non-Mixed Use)
Commercial real estate can include larger multifamily apartment buildings with more than five units, office buildings, storage facilities, hotels and shopping centers among other property types. Mixed-use properties are commonly a combination such as offices or retail along with residential or multifamily. Therefore, commercial non-mixed real estate is designed and utilized with a single purpose only.
Today’s low interest rates offer unique opportunities to lock in interest rates on commercial mortgage loans to help compound your invested money, while long-term leases can reduce risk exposure.
Farm Land/Agricultural Business
Farm Land is a limited asset and therefore can be considered a great investment. Not only can an investment in farm land or an agricultural business benefit the investor in financial gains, but can be a way of investing with social benefits by providing food and/or jobs to the greater community.
Although land may be zoned agricultural, a business is qualified as a farm by the Internal Revenue Service only if it is actively cultivating, operating or managing land for profit. This may include livestock, dairy, poultry, fish, vegetables and fruit. Agricultural financing may offer fixed, adjustable rate, or variable rate options.
If you are interested in discovering new ways growing your capital, investing in real estate can be a terrific way to diversify your investment portfolio, generate additional revenue and build equity.
1 Stop Lending is contracted with some of the lowest-priced lenders in the nation and can provide all loan types and expert guidance for your real estate investment financing, along with unsurpassed customer service.
If you are interested in learning more, we are just one phone call, text or email away from answering any questions you have – visit https://1stoplending.net.