Real estate investing can be exciting and profitable, especially when an investor learns one aspect of real estate very, very well. Like doctors specialize in an area of medicine and artists specialize in media, real estate investors can choose to specialize in a particular niche. The biggest benefit in doing so involves becoming incredibly knowledgeable about one particular thing so that you can maximize your potential.
For Sale By Owner
The “for sale by owner” niche is probably one of the most common among investors, and it simply refers to buying a home and selling it later for a profit. In most cases, an investor buys a home or property, renovates it, and then puts it back on the market at a significantly higher price. This is called a fix-and-flip. Sometimes, though, investors may buy properties in certain areas, then hold them until that area sees a population or industrial boom. At that point, the home value skyrockets and the investor can earn a profit with very little work required.
Rental Properties
Rental properties make up another popular niche that many real estate investors prefer. Essentially, the investor buys a home or apartment building, renovates it, and then rents it out to tenants. Some investors handle the landlording aspect themselves, but others hire property managers or work with third-party property management firms. Though expensive, property management services free up the investors’ time, which allows them to focus on other projects. Landlording is not for everyone, so be sure that you fully understand the requirements in your area before settling on this niche.
Vacation & Short Term Rental Properties
These days, services like Airbnb, Vrbo, and Homestay have become incredibly popular among all kinds of people, ranging from the average young professional to entire families planning vacations. Many real estate investors have chosen the vacation and short-term rental niche, which means they buy properties and renovate them to convert them into Airbnb, Vrbo, or Homestay properties. The potential for profit is substantial, but it can require quite a bit of work and management to get the most out of these properties.
Unique Properties
Finally, if the traditional properties don’t entice you, you might consider investing in the “unique properties” niche. This is a very broad term, and it covers everything from real-life log cabins and massive Victorian-era homes to some of the wildest and most eye-catching architecture in the world. Though this is a fun real estate investing niche, you’ll need to be prepared to invest in multiple places, which often means spending quite a bit of time traveling. For some investors, this is a dream come true; for others, it defies their ultimate goal of passive income.
A real estate investing niche gives you the opportunity to focus your efforts and expertise on one area of real estate. Whether you choose to buy and sell properties, rent your properties out, focus on vacation rentals, or even get involved in some of the most unique architecture in the world, the possibilities – and the profitability – is endless.