Types of Real Estate Investment
There are four types of real estate investment. These are value, liquidity, liquidity risk capital. The four types are discussed below.
Value investing is the most common type of real estate investment. In this type of investment, the price of the property is determined by the present worth of the home in relation to the market value of the area. This investment makes sense if the home has good resale value and if the market is at least good enough to hold that value. It also makes sense to purchase a home that will be held for a long time.
Another type of real estate investment is called "liquidity". A property can be considered "liquid" when there is little risk of it going into foreclosure. With the availability of loan products and foreclosures, a home can be purchased with as little as $500. Liquidity investments include housing, commercial real estate and industrial real estate.
Finally, the last type of real estate investment is "risk capital". Risk capital is a real estate investment in a property that will lose its investment value if the economic conditions surrounding the home change. Examples of risk capital real estate investments include oil & gas, uranium mining and metals manufacturing.
So why do people invest in risk capital investments? Risk capital is a higher return type of real estate investment. It is also one of the more popular types of real estate investment.
Before choosing to invest in risk capital real estate, it is important to understand its risk factors. Some risks are specific to certain types of real estate investment and some are not. For example, uranium mining companies have to pay for their infrastructure in advance and that means taxes, licenses and insurance.
They are subject to the laws governing their particular form of energy production. If the government falls through on an agreement to provide the needed infrastructure, the company may have to close down. Click for Marina One Residences
Some forms of real estate are clearly safer than others. There are many investors that buy real estate just because they believe in the ownership and are prepared to spend the necessary funds to ensure that the property is there to stay.
The risks that come with purchasing real estate can be overwhelming to some people. The money you invest should be a consideration when choosing the right real estate investment.
Usually a business like a grocery store, motel or retail store that deals in real estate will invest in real estate that has good resale value. For a real estate investor that has a solid understanding of economics, this is usually the best type of real estate investment.
An investor that is ready to invest their own money in real estate that has low-end market value will invest in distressed real estate. As the name implies, this type of real estate investment is in jeopardy of foreclosure and the investor will take over ownership of the property.
Finding the right type of real estate investment is a difficult task. It will require a detailed understanding of economics, legal issues and how to read the news. An investor that is prepared to invest their own money in the right type of real estate can be confident in their investment and stand to make a great deal of money in the future.