The 3 Types of Real Estate Investing
Investing in real estate can take various forms, each offering unique benefits and challenges. Here are the three main types of real estate investments:
- Buying Your Own Home
- Buying or Building Residential Rental Properties
- House Flipping
1. Buying Your Family Home
Purchasing a primary residence is often overlooked as an investment, but it provides valuable long-term benefits. Those who fully pay off their homes gain financial security and peace of mind, offering stability for themselves and their families. With no mortgage, homeowners can reallocate money toward other investments, accelerating wealth-building.
2. Buying or Building Residential Properties for Rent
Residential rental properties are a popular investment for generating income. However, even after acquiring or building a rental property, landlords must manage various responsibilities—such as finding tenants and handling maintenance and repairs—making it more of an active income source than passive.
3. House Flipping
House flipping offers a faster return on investment (ROI) compared to renting. Here are two popular methods:
- Buying Undervalued Properties: Purchasing properties at a low price, making improvements, and selling them at a profit.
- Investing in Off-Plan Developments: Buying property in a new development before completion, then selling upon its finish for a higher price.
When flipping houses, timing and numbers are crucial. Entering at a low price reduces risk and increases your exit profit potential. Additionally, if you decide to rent out the property instead of selling, aim for an annual rental ROI between 8% to 10%.
Crystal Oak Apartments: Urban Luxury Living in Kileleshwa, Nairobi
