Real estate investment is arguably one of the best ways to grow your portfolio and accumulate wealth. No matter where you are, investing in real estate is often the best idea. Unlike other intangible assets, this tangible asset provides a sense of security unmatched by any other global asset.
When it comes to investing, there are various properties that you could invest in, and knowing all the available options will help you make the best decisions.
If you are only beginning to invest time in real estate, you might wonder what is leverage in real estate. It is a popular term that investors use, which holds much importance in the industry.
Leveraging is using less equity and more borrowed money to buy poverty and generate cash flows from it. The goal is to repay the monthly payments using the property’s cash flow.
Using leverage financing in real estate, you can buy various properties. The following are some of them.
1. Residential Properties
Buying a home is every American’s dream, and the US has one of the biggest residential property markets in the world. The real estate industry in the country is estimated to be worth $33 trillion.
This is bigger than the GDP of the top two countries in the world. Even in the residential industry, there are various properties that one could consider buying.
Moreover, the property’s value has increased by more than thirty percent in the last ten years.
Now, with the changing trends, the housing needs of the people change over the course of their life; with more and more alternative housing, micro houses, and sustainable living solutions coming up, the options are increasing. The following are a few of them:
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- Condominiums
- Cooperatives
- Triplex
- Duplex
- Fourplex
- Mobile Homes
- Single Family houses
- Villas
- Farmhouses
These are some types of residential properties you could buy using leverage financing.
2. Commercial Real Estate
The commercial real estate market is arguably one of the best ways to increase your portfolio’s value.
Any shopping center you see, a strip mall, a large office building, or any other place of business is always owned by a commercial real estate investor.
Even if you can not buy a large building, a small multifamily unit can generate a significant cash flow.
Leveraging is the most effective way to acquire commercial properties, as the cash flow will help pay the mortgage, and you will be able to earn some extra income.
Knowing what is leverage in real estate and how you can use it to your benefit will help you grow in your asset generation and financial endeavors by acquiring more properties. Some examples of lucrative commercial properties you can invest in are:
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- Office spaces
- Apartment buildings
- Mobile home parks
- Hospitality Property
- Grocery stores
- Movie theaters
- Parking lots
3. Industrial Properties
Many people often categorize industrial properties under commercial real estate, but it could be considered a separate leg of commercial properties.
For instance, manufacturing units, production facilities, storage facilities, research and development parks, and spaces for power grids can be considered industrial properties. Owing to the vast nature of investment in industrial real estate, one can consider various investment options like REITs, multifamily real estate syndication, and leverage financing per one’s financial capacity.
4. Land
Investors or commercial builders often purchase vacant lands, thinking more of the long term.
If you buy land, the maintenance costs and other taxes are low, and the opportunities are endless.
However, finding a piece of land can be challenging since few vacant plots are available for sale.
These are some of the best types of properties that you can buy for personal use or investment purposes. Besides private residential property, every other type of property will help generate a cash flow for you. You can study the various nuances of the real estate industry and investment options and proceed with leveraging from this industry accordingly.
