Types of Real Estate Investment
You are already a Real Estate Investor if:
- You own a home
- You own stocks and bonds – Every Corporation has real estate on their balance sheets
- Have a Pension – Every Pension Fund has a Real Estate Allocation – 3-20% is a typical asset allocation in the Real Estate Sector.
- Own Life Insurance
Other forms of real estate investing are:
- Income and non-income producing – Land is a Non-Income producing investment.
- Private funds – There are Private forms like local Brauvin, http://www.brauvin.com, which is a private fund for investing in net-leased properties. This is just a local example – there are thousands.
- Partnerships, LLCs
- Real Estate Investment Trusts – REIT. Publicly traded like a stock, but must flow thru a high amount of the income in order not to be taxed at the REIT level. Became popular in the 90’s and now hold almost all of the large institutional quality properties.
- Private REITS – usually sold thru Investment Advisors. https://www.reit.com/what-reit/types-reits/guide-private-reits One of the largest in the US, and based in Oakbrook, is the Inland Group, which is huge and really well run http://inlandgroup.com
- TICs – Tenant In-Common. – these were formed in order to handle 1031 exchanges for “like kind” investments https://en.m.wikipedia.org/wiki/Tenants_in_common_1031_exchange
- Tax liens – one of my favorites. Basically, if you buy a tax lien, you can have a preferred position in the ownership and get a preferred 12-18% return. If the lien is not paid off, you own the property. I could write tomes about this form of investment. There are several investment funds that pool money and provide their investors with above par returns. http://www.bankrate.com/finance/real-estate/buying-a-home-in-a-tax-lien-sale-1.aspx this is a site for taxes liens on homes, but there are also tax liens being sold on commercial properties, they are typically mixed in.
- Crowd Funding – believe it or not, this is a growing source of investing in real time estate, it is in small pieces and fun. https://fund.realtyshares.com/crowdfunding-search?utm_source=google&utm_medium=cpc&utm_campaign=Shared-Crowdfunding-Search-Alpha&utm_term=real%20estate%20crowdfunding&utm_device=t&utm_content=219804912191&utm_placement=&gclid=CjwKCAjw7frPBRBVEiwAuDf_LdOPU_of6v4vyRqlo3UDXu5L7nhhmWLxZjE9eqVVRoog5iEM1M6rFxoClAEQAvD_BwE
Real Estate Food Groups
I call them food groups like a Tomato is a Vegetable. There are hundred of variations within each food group. I will be writing about each one in future blogs/pages.
The Ranking here is in order of complexity, with Retail the hardest
- Apartment – five units or more are considered commercial
- Hotel/Motel – unless you are buying a lease or a “managed property”, Hotels/Motels is really a business enterprise