What Is Investment Real Estate? A Guide to Income-Generating Properties

Investment real estate is real estate that generates income or is otherwise intended for investment purposes rather than as a primary residence. It is common for investors to own multiple pieces of real estate, one of which serves as a primary residence while the others are used to generate rental income and profits through price appreciation. The tax implications for investment real estate are often different from those for residential real estate.

By: Velorine

Understanding Investment Real Estate

Investment real estate can provide opportunities for financial gains to investors. Owning investment properties can help build wealth, increase income, and help diversify an investment portfolio. Although there are many types of properties in the real estate market, primarily, most properties can be broken down into four classifications: RESIDENTIALS, COMMERCIALS, INDUSTRIAL AND LANDS.

Residential

Investment real estate can include residential land and properties. Residential investments typically involve homes, townhouses, and condominiums. Residential properties can be multi-family or single-family units.

Commercial

An investment in commercial real estate might involve the ownership of retail stores, office buildings, or storage facilities and warehouses. Investment in commercial real estate is typically more involved and costly than residential investments. Commercial property leases can be longer than a residential rental agreement. Both the costs and profitability are usually measured on a per-square-foot basis.

Industrial

Industrial real estate includes properties used for manufacturing, production, storage, and distribution of goods. These assets are essential to the logistics chain and are often located near major transportation hubs like highways, ports, and airports.

Common types of industrial properties include:

• Warehouses – For storage and distribution.
  
• Manufacturing facilities – Where goods are produced or assembled.
  
• Flex spaces – Mixed-use buildings with office and industrial space.
  
• Data centers – Facilities that store and manage digital information.

Land

Land is also an excellent investment because you can turn it into any of the following investments above. Although, you’ll need to put in a considerable amount of money to get it up and running. While many investors focus on fully developed industrial properties, raw or undeveloped land holds powerful investment potential—especially in high-growth corridors or near planned infrastructure.