Top 10 Niches for Real Estate Investors

Over the past decade, the sharing economy (and the internet) have radically transformed the short-term rental industry. People who were once far removed from real estate investment are finally dipping their toes into this highly lucrative water.

But what many inexperienced investors fail to realize is that vacation rentals aren’t the only way to break into the industry. While VRBO and Airbnb are wonderful tools for budding landlords, there are so many other commercial properties ripe for the picking. Depending on your location, many of them are easily accessible—and far more profitable!

Finding your type

If you have disposable capital, buying real estate offers so many unique advantages. Still, with so many property types to choose from, the process can be daunting.

According to our friends at First National Realty, “For individuals, an investment in real estate is a great way to generate ancillary income, diversify a portfolio, and reduce taxable income through the strategic use of depreciation.”

But for some people, the problem isn’t coming up with the money or developing a strategy. It’s understanding the vast and varied real estate market and all its intricacies. Not only are there countless types of properties to consider, but each comes with its own “operational quirks, risk/return profile, and level of management responsibilities.”

Depending on your specific investment goals, some niches might align perfectly, while others become a massive headache. It’s important to factor in your risk tolerance as well as how much time you can realistically put into managing and maintaining your properties. For instance, owning a small single-family home is way different than running a multi-unit high-rise.

Which niche is which?

Education is everything. Before taking your first step down commercial street, check out our definitive list of property types for eager investors. Which will you specialize in?

And experienced owners—we didn’t forget about you! If you’re considering branching out into other property types, be sure to reconnect with your friends at Everest.

Top 10 Real Estate Investment Niches

1. Commercial Real Estate

The title sounds broad, but commercial properties typically break into four subsets: retail, office, industrial, and self-storage. In essence, this includes any property that you can lease to people or businesses to generate income. Because your options are so diverse, the sky is truly the limit when it comes to scalability and profitability.

Examples: strip malls, grocery stores, corporate offices, warehouses, power centers, manufacturing plants, storage facilities

2. Single Families

Perhaps the least intimidating of all investment properties is the detached single-family. Purchasing a standalone home allows you to rent to a family for rental income or operate a vacation rental through Airbnb or VRBO. Perks include consistent rental payments, great availability of debt, and the ability to sell quickly if needed.  

Examples: beach house, lake house, mountain cabin, tiny home, or any similar single-detached dwelling

3. Duplexes/Triplexes/Quadplexes

Somewhere between the modest single-family and the gargantuan apartment building live the ‘plexes.’ Basically, any residential property housing two (duplex), three (triplex), or four (quadplex) units. These assets are an excellent option for investors looking to subtly expand their rental operation while keeping their management duties in check.

Examples: residential two-families/three-families/four-families, affordable housing, college housing

4. Apartments & Multifamilies

Any building with more than four units falls into the ‘multifamily’ category, which encompasses all kinds of layouts and configurations. These buildings are mostly concentrated in urban settings, although there are smaller versions found in suburbia. Perks include maximum occupancy levels, reliable cash flow, and good lender terms.

Examples: high-rise apartments, multifamily rowhomes and complexes, garden-style units, subsidized housing

5. Hospitality

The hospitality sector of real estate is all about the short-term—but totally profitable in the long-term! Owning or leasing hotels, motels, resorts, and other pay-per-night properties can be incredibly rewarding as they boast relatively high returns and enable you to make a meaningful community impact.

Examples: full-service and limited-service hotels, resorts and spas, budget motels, extended stays

6. Condos

Investors love condominiums for their low maintenance, affordability, and wide rental opportunities whether you’re located in a vacation destination or typical residential area. What differentiates a condo from a home or apartment is that it is contained within a larger building (or attached to other units) and usually demands HOA fees.

Examples: residential condo, timeshare, detached and attached condos, condo buildings

7. Communities

Go big and go home! This commercial subsector mixes multifamilies with retail and also includes special-use scenarios such as ‘55 and older’ communities, golf course communities, or any multi-unit or multi-home property with added amenities. These extras bring in additional income streams, making community investments highly advantageous.

Examples: retirement communities, resort communities, independent living communities

8. Land

Use your imagination with this one! While fancy buildings draw many investors’ eyes, don’t discount the opportunity to own empty or vacant land. Location is key, and when strategically purchased, you can use land for various kinds of development—or—sell for a profit. Not to mention, it cannot depreciate because of its ‘infinite useful life.’

Examples: farmland, vineyards and orchards, empty residential and commercial lots

9. Parking Structures

When located in a high-traffic area, parking structures can generate some serious income for super-low operating costs. As long as you maintain the land and structure, lighting, security, and other essentials, this one’s a no-brainer.

Examples: parking lots, garages in cities, near malls, hospitals, sports complexes, airports, etc.

10. Medical

All hail the long-term lease! Commercial pros love medical tenants for their reliability and awesome shelf life. The need for doctors, urgent cares, and other medical services will never cease, making these properties especially desirable. Experts also note that beyond healthy demand, they also come with lower credit risk.

Examples: doctor and dentist offices, research labs, diagnostic facilities, hospitals

Everest says: we take every type to new heights