You want to invest in real estate, but you’re not interested in buying a single-family home. However, you’re not sure what other options you have.
While buying — and subsequently renting out — a single-family home might be the most common investment, it’s far from the only one. GOBankingRates spoke with several real estate experts to get their take on alternative real estate investment options. Here’s what they said.
Real Estate Investment Trusts (REITs)
Want to invest in real estate without directly owning properties? Denis Smykalov, a real estate broker at Wolsen Real Estate based in Miami, said this type of investment vehicle could be an option.
“REITs are traded on stock exchanges, and they pool funds from multiple investors to invest in various real estate assets,” he said. “Investing in REITs provides diversification, liquidity and the potential for income through dividends.”
Mobile Home Parks
“Mobile homes provide affordable housing, and the demand for affordable housing is often stable,” Smykalov said. “Mobile home parks can generate consistent cash flow through lot rentals, and there is potential for additional income from amenities and services offered within the park.”
It might sound a bit non-traditional, but Smykalov said investing in self-storage facilities can be profitable.
“The demand for storage space continues to grow, and these facilities offer relatively low operating costs,” he said. “Additionally, storage units provide a recession-resistant investment, as people often downsize or require temporary storage during economic downturns.”
“One of the reasons why farmland investing generates such strong returns is consistent year-after-year increases in the value of farmland,” said Dutch Mendenhall, founder of RAD Diversified REIT. He said investors can also enjoy the added benefit of crop yield and cash rental payments.
“Rental payments function like residential or commercial estate, in that an owner purchases the property and rents it out to a tenant, who pays monthly for the ability to use the land,” he said. “However, farming real estate investors have an additional opportunity — becoming an owner-operator and profiting from the crop yield itself.”
He said the most obvious way to invest is to purchase the land directly. However, this can be costly.
“Investing in farmland involves a significant upfront investment, since farms require a large amount of acreage — the average farm size being 446 acres,” he said. “Because the average price of farmland per acre is $3,800, that equates to over $1.5 million to invest upfront, which is simply out of reach for most investors.”
Instead, he recommended seeking out REITs that specialize in farmland investing. “Some REITs have minimum investment requirements as low as $1,000, meaning they are within reach of almost anyone who wants to invest,” he said.
Vacant Residential Lots
Investing in vacant residential lots offers many benefits over renting out single-family homes, according Danny Johnson, CEO at Danny Buys Houses, based in San Antonio, Texas.
He said that there are lower prices, lower property taxes, no need for property insurance, no concern for vandalism and no surprise repairs. “You can either hold on to the land and sell it many years later for a profit or find developers to buy the lot for more than you paid,” he said.
Commercial Real Estate
“Investing in commercial real estate can be a game-changer for your portfolio, offering diverse benefits that go beyond traditional residential properties,” said Filippo Incorvaia, CEO and broker at FI Real Estate, based in Miami. He said commercial properties should be on your radar because they offer stable cash flow, triple net leases and appreciation potential.
“Commercial properties, like office buildings, retail spaces, and industrial complexes, often attract long-term leases, three-to-five year terms,” he said. “This generates a steady cash flow stream for investors, providing financial stability and consistent returns.”
He also noted triple net leases as a standout feature with commercial real estate. “These leases transfer the property expenses such as taxes, insurance, and maintenance, to the tenants,” he said. “By minimizing your financial obligations, you can maximize profitability as a landlord.”
Additionally, he said commercial properties in the right location have the potential to earn significant appreciation over time. “Investing in areas experiencing economic growth or high demand can lead to substantial capital gains,” he said. “When you invest strategically, you position yourself for long-term financial success.”
Condo Investments/Airbnb Properties
“Diversifying your real estate portfolio with condo investments or Airbnb properties offers exciting opportunities and alternative income streams,” Incorvaia said. He added that this is due to rental income potential, reduced maintenance responsibilities and personal use flexibility.
“Condos and properties suitable for short-term rentals, like Airbnb, can generate impressive rental income,” he said. “High-demand vacation destinations or bustling urban areas can provide attractive rental rates and occupancy levels, ensuring a healthy cash flow.”
Beyond that, he noted HOAs — homeowners associations — often handle the upkeep of common areas and amenities on these properties, leaving you responsible for minimal maintenance. “This allows you to focus on the financial aspects of your investment and enjoy a hassle-free experience,” he said.
Additionally, when you invest in an Airbnb property, you get the flexibility to use the property when it’s not rented out. “This feature provides you with a vacation home or a convenient place to stay during business trips, adding a personal touch to your investment strategy,” he said.
Purchasing a multi-family building could allow you to benefit from rent hacking, where you live in one unit and rent out the other(s), said Jennifer Carey, director of sales at REAL New York, based in New York City.
“Multifamily properties with commercial spaces can be very advantageous and offer investors more stability and options,” she said. In fact, she’s currently privy to this type of opportunity.
“For example, I have a sponsor right now who is offering a special on bulk purchases of apartments in a building in Queens,” she said. “These kinds of deals are unusual, but could make interesting financial sense for the right buyer.”
As you can see, single-family homes are just one of many types of real estate investment options. If you’re ready to make the leap, take the time to conduct research to find the right fit for you.
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