Almost all careers or income strategies start generally and become more focused over time. Take a career in medicine, for example. You start as an intern learning general medicine. Then, as time goes on, you choose a “specialty” or a “niche” like heart surgery or oncology.
This helps doctors become experts in their specific field leading to better quality care and more focused knowledge.
The same principle applies to investing. Attempting to be a general “investor” for all things real estate is unrealistic: there are too many niches and subsets within real estate to become an expert on them all.
So if you want to know how to invest in rental property, our answer is find your niche! Here, we’re going to look over some common niches that you could consider for your investment.
By Location
Location is a common niche for many property investors.
Narrowing down your focus to a certain neighborhood, town, city, or region makes it a bit easier for you as an investor to research and purchase properties. Instead of sorting through thousands and thousands of options in an entire state or country, a specific area will make it much more manageable.
This will also allow you to become an expert in the area you choose. You’ll know about all of the details and quirks of the area, the selling points, the negatives, where the best locations in the area are, which plans are on the horizon, and more.
Having a niche in a certain location also allows you to build a great network of people. This could be probate property related people, local real estate agents, city hall workers, other property investors, etc.
By Property Types
You might be surprised at just how many property types are out there that you can specialize in.
Multi-family homes and apartment buildings are very popular rental property investment opportunities since it allows you to collect rent on multiple units and from multiple tenants with the purchase of a single property.
Other common rental property investment niches by type include:
- Duplexes
- Condos
- Townhouses
- Commercial office buildings
- Commercial retail spaces
- Inherited homes
Don’t think that the list ends there, though. Those are simply the more traditional options.
Non-traditional options can have great advantages. You’ll have less competition and can capitalize on a niche that hasn’t been capitalized on previously.
Vacation rental property is becoming much more popular, especially with platforms like AirBnB soaring in popularity. Student housing and luxury housing options are also often forgotten in the rental market.
Other commercial niches include options for manufacturers and industrial commercial locations.
Specializing in off market sales is another option. While that requires a bit more work and more knowledge on the subject, it can be a lucrative investment.
Along a similar line, looking into sellers looking to avoid foreclosure, along with other similar situations like probate properties, can be great rental property investments. To excel in those areas, you’ll need to understand the probate and/or foreclosure process.
To learn more about how to find probate properties, check out the Growing Edge guide to probate properties on our blog.
By Condition
Are you inspired by television shows like Flip or Flop or Flip This House? Not afraid of a challenge if it comes with a rewarding (and often lucrative) finish?
If that sounds like you, sorting properties by condition could be for you. If you’re ready to completely gut a property or at least put a fair amount of effort into it for resale or to eventually rent out at a higher price, you could consider a niche in distressed properties or properties you purchase to then “flip.”
Here you may find some overlap with other types of investment. Foreclosed homes tend to require more TLC than others, for example. Meanwhile if location is your main focus, finding a place in decent condition that needs less work to turn over for a profit could work for you.
More Questions on How to Invest in Rental Property? We’ve Got You Covered
We hope that this article helped you understand a bit more about how to invest in rental property.
Deciding on your niche doesn’t have to happen overnight, either. Take your time to research these different niches as well as the opportunities that are available in your area.
Growing Edge Properties has years of experience in the real estate and rental space, and we’d be happy to help you reach your goals. Contact us if you’re interested in learning more about how to invest in rental property, or have any other questions about property investment.