What Type Of Real Estate Is Most Lucrative In The Year 2020?

Property prices continued on an upward trend in the late stages of last year. Global pandemics aside, America's property market is in a healthy condition.

This is potentially great news for property investors. However, an important question remains; is it better to invest in residential property, commercial property, or another type altogether?

Read on as we decide which is the best type of real estate to invest in in 2020.

What is Residential Property?

Residential property is any building in which people live. There are a few subcategories here.

Owner-Occupied Housing

This is a property that is owned by the people living in it. An investment in this type of property will result in a once-off profit (or loss) when it is sold.

Long-Term Rental Property

This term refers to property that is let to residents on long-term leases, typically a year in length. Returns here come in the form of monthly rent.

Short-Term Rental Property

The market for short-term rental property has exploded in recent years due to Airbnb.

While this development has negatively affected people's ability to find affordable housing in many areas, it has presented huge opportunities for investment. Many investors have begun to buy up several properties in an area and let them on a short-term basis through Airbnb, making a healthy income.

What Is Commercial Property?

Commercial property refers to any building in which people conduct business. There is more diversity here than in residential real estate. Commercial property can be office space, shops, or even parking lots.

There are a number of advantages to commercial property.

Firstly, businesses tend to take a more professional approach to tenancy than residents. Business tenants generally take better care of properties, and are more likely to consistently pay their rent on time.

The law also offers less protection to commercial tenants than residential ones. That means that you'll have less trouble securing an eviction order in respect of commercial property, if you come to need one.

Factors to Consider

So, should you invest in commercial or residential real estate?

Commercial properties tend to have a higher yield than residential ones. However, the trade-off here is that businesses can go bankrupt if their ventures fail. Losses, therefore, are also more likely.

You should also bear in mind that demand for housing is currently high. This means that letting a residential property at the moment is likely to be quick and straightforward.

Short-term rentals through the likes of Airbnb can be very high-yielding investments compared to longer-term property rentals. However, this strategy will require active management of the property, whether by you or someone you employ.

What Type of Real Estate Will You Invest In?

Whatever type of real estate you decide on, there is plenty of money to be made if you make the right choices at the right time.

The investment you make will ultimately depend on your goals, whether you would prefer not to actively manage your property, and your risk appetite.

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