How To Invest In Real Estate Safely

real estate investment types

As Ada Louise quotes “Real estate is the closest thing to the proverbial pot of gold.” Various people have become millionaires through the property. When you play the right cards and find the perfect real estate property for you; there’s nothing that can stop you from being wealthy. The property serves as a very valuable asset when chosen correctly. 

But which property should you invest in? There are tremendous options out there and choosing the right one can be perplexing. 

Understanding the types of the Real estate can help you select better. The two broad categories under which real estate can be placed are:

  • Active 
  • Passive

Active investments require you to be voluntarily involved. It doesn’t incorporate only money but also your time and labor. Shifting residences is an example of this. 

Passive investments are properties you do not make use of personally and only manage. Crowdfunding, REITS are examples. 

Let’s look at the different types/options of Real estate, and their pros and cons so you can decide better!

A) Residential Real Estate

A place to stay is one of the three basic, minimal needs. The demand for residential real estate is never-ending, which is why it has high potential to bring in tremendous profit and continuous income. Residential real estate is an active investment and requires effort from your side, but it is definitely worth it. A few options for Residential Real estate are – 

1. Rental property: Bought solely to rent out to tenants and gain income 

2. Vacation rental: A property at a tourist place; which will be rented out occasionally. 

3. Flipping: Buying a property and fixing it to sell it. This involves a lot of monetary costs from your side, therefore, it is risky.

4. Micro flipping: This involves buying property at a low cost than their potential value in the market and selling them at a higher price. 

rental property

Pros- You can make a lot of money from residential property since the demand for them never ends, there’s a very high probability of property value increasing over time and there are tax benefits too. 

Cons- Can be expensive, buying and selling are time-consuming, and the property has low liquidity since you have to wait for buyers or renters.  

B) Commercial Real Estate

Retail stores, offices, and all other non-residential corporate estate are considered commercial real estate. It’s similar to residential real estate as it can be rented out and sold off when the property value appreciates. 

commercial real estate

Pros- More lucrative than residential property, the value depends on how well the business is being practiced there; thrives and how much revenue is generated, it is less risky. 

Cons- One needs to ensure the tenants are decent and the business practiced in their property is legal, more time-consuming, being public there’s a lot of risk involved and needs to be paid heed to.

C) Raw land 

This was a traditional form of investment. Raw lands are plain lands and have nothing on them. They are cheaper to invest in and the price does go up eventually. Land investors can rent land to farmers for agricultural purposes or they can build property from scratch on it and rent it out or sell it for advantage. 

Pros- Easy to acquire, cost-efficient, and multiple options at disposal.

Cons- Getting approval can be daunting, might not generate good revenue instantly, and offers minimal tax benefits.

D) Crowd-funding 

It is a relatively new way of investment wherein investors compile their chunks of money and pool it into a property.  This is often done online and is a passive way of investment. 

Pros- Little effort involved, investment is not exorbitant, and offers unique opportunities.

Cons- Dividends received are taxed, users are charged fees for service, and you need to possess a certain amount of income to participate in it.


Real Estate Trust Investments require you to invest in properties managed by companies rather than owning property yourself. REITs mostly concentrate on commercial property and are passive investments.  

Pros- You do not have to be involved in the process and management of property, make small amounts of profit with time, works almost like stocks. 

Cons- Better as long-term investments, not very beneficial for short-term, you have low control over the property, and the property is highly taxed. 

Each property comes with pros and cons and it can be highly baffling to choose what might work best for you since there’s always a chance of loss or profit. Agencies like have experts who help you understand the property’s worth, and get you the most impeccable property. 

Investments are the most undeniable source of being affluent, and real estate investments are thriving each day. Since demand for property is strong, it is a safe investment that will never bankrupt you. Hence, do not wait to buy real estate; buy real estate and wait!

We hope you found this blog post Different Types of Real Estate Investment useful. Be sure to check out our post Placing Your Commercial Property for Sale? for more great tips!

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