Most investors who invest in income properties invest in residential real estate. In houses and apartments that they can rent out. This can often be very profitable. The problem is that there might be many other investors competing for the same houses and apartments as you want to buy. This will drive up prices, make it harder to find good deals and reduce profits for everyone.
Sometimes it can be better to invest in another type of property. Doing so can make it easier to be able to find good buys. In some cases, you can be the only person actively buying and renting that type of properties. Doing so can be very profitable. An example of this is that storage properties used to be very profitable to invest in. Storage can still be a good investment but it is not as profitable as it once was. The reason for this is that the competition is a lot higher today. Try to find a type of property that is in demand but that few investors cater towards. This will make it easier to make a profit.
Below we are going to look at some types of properties that often can be good investment properties.
Student housing can be very profitable if you live in a university city. It is often possible to convert a regular house into several student units. Students are willing to live in small units and are willing to share kitchen and other facilities. This makes it easy to divide houses into small units. A house that has been converted into student housing can earn a lot more than the house would fetch on the regular housing market. Each unit is going to rent for less than the house would but the total income will be higher.
Most university cities have a scarcity of student housing and it is often very easy to find students looking to rent a room in a student dorm. You can be almost guaranteed to have your units rented during the academic season. It is common for the units to stand empty during the sommer when there are no classes. This gives you time to perform repairs.
It is important to know that student housing will expose the house to more wear and tear than an average income property will. You will need to perform more repairs. Student housing remains, great earners, even after you take this into account.
Commercial properties can be a good option if you want to invest in an income property. This type of property does however often require you to have more money to invest than residential property. Commercial real estate is also riskier. The risk of being unable to find a tenant and lose money is a lot larger than it is in residential real estate market. The exception for this is commercial real estate in prime locations. Commercial properties in prime locations are often very expensive and is likely not a viable option for most investors who read this article. Most people who have the money to buy these properties are experienced property investors.
Commercial properties can be very profitable if you are able to find tenants to rent them out. Being successful in the commercial space takes more effort and more research then residential real estate.
A special type of commercial properties is specialty commercial properties, properties that are designed with a single purpose in mind. This includes restaurant space, car lots, and casino properties. It is possible to redesign them for other uses but doing so is often expensive. Investing in specialty real estate can be extremely lucrative but requires you to know a lot about the industry and its future. You do not want to be heavily invested in casino properties if local casinos are losing market share to online casinos. Never invest in specialty properties in industries that are being disrupted by new technology.
Executive rentals are residential units that have been designed to be rented to companies that are looking to house workers from out of town. They are often willing to pay a high rent but they expect a fully furnished high standard unit that is centrally located. It is often impossible to make money with executive rentals unless you own properties in prime locations. It can be possible to make money with executive rentals outside of the city if your property is located near the main office (large office) of a large business. In that case, the company might want to house people close to their offices despite it not being central. I recommend that you talk to the business in question before you decide to create an executive rental. Their personnel department should know if they need executive rentals in the area or not.
An executive rental does not have to be big, but it needs to be kept in immaculate condition.