Types of real estate investment

RESIDENTIAL This is perhaps the most commonly known variety, involving investment in property such as houses, flats and holiday home. Many invest in houses and flats in which to live but also make a business out of buying, renovating and leasing them. A common form of this business model is student housing. As well as owning the asset, you receive income from rent, thus making money.

COMMERCIALThis bracket of investments generally includes office buildings. These tend to be larger scale investments taken on by seasoned investors, although consortiums do exist. Once owning or having made an investment into an office building, you lease out individual levels or spaces to companies and small business owners, who would pay you rent to use the property.

INDUSTRIAL• Another form of commercial property, this type of investment

generally includes real estate involving some form of service like storage companies, petrol stations and warehouses. It includes anything that generates sales from customers who temporarily use the facility.

RETAIL• Fairly self-explanatory, retail investments include things like shopping

centres, individual shops and restaurants. Again, this form of investment generally includes payment of rent but in some cases, the landlord also receives a percentage of sales generated by the shop in addition to a base rent. This is a clever incentive to ensure they maintain the property and keep it in good condition.

MIXED-USE• This is a type of investment that combines any of the above

categories into a single project. As the real estate market develops, this is a design increasingly seen in new developments, where you find residential, retail and commercial units all in the same structure. The fact that they span a range of sectors, makes them a valuable asset, which might explain the trend. If one portion of the property market dips, you have the other elements of the building to maintain value.

REAL ESTATE INVESTMENT TRUSTS• These work like stocks and involve a portfolio of underlying real estate

or real estate mortgages. They are a form of security, which invests in property through bricks and mortar and mortgage loans.