Real Estate Investments And What Different Types There Are
Posted on November 27, 2008
Filed Under Foreclosed Properties |
The idea of real estate and property is much more than just finding a home. There are categories of homes and business properties as well as divisions in the types of real estate that are available to others. If you want to make a different type of investment in something that you know you can make a profit out of, then knowing the different types of real estate investments can help.
Real estate investments begin with two major types; business and residential.
Each of these has specific guidelines set with them which will make a difference in the functions of the real estate. After you have determined what type of real estate you will be looking at, you can divide up what is available to you.
If you are looking at pure residential areas, then the real estate will be divided by the size of the home.
Typically, this will be known as a single family or multi-family home. If you are looking at a multi-family unit, you can expect to have neighbors sharing the same wall as you, such as condos or town homes.
A single family home will be completely independent and will usually be shaped differently because the neighbors can’t cross the yard.
Business real estate is also divided into several categories. These will also often be referred to as commercial properties, and will range from office buildings to manufacturing sites.
The difference between a business building and a residential building is that it will change the approach towards regulations. Most likely, there will be zoning rules and the lease will have different divisions for things such as taxes and insurance.
If you are in the right area, you might have the opportunity to have both a commercial and residential area in one. Things such as land investments or areas that have been zoned for commercial purposes may have these types of regulations.
With this, you can also consider renting a property. If you want to have a business from home or want to expand into a business, this might be something to consider.
The investment that you decide to make can be more than your home. It can also be something that will bring you back profit for the investment.
If you are interested in finding a space that is much more than cozy, than knowing the different types of real estate to invest in is the place to begin.
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4 Responses to “Real Estate Investments And What Different Types There Are”
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Does “like-kind” exchanges work bet 2 different types of investments (ex: real estate->stocks)?
I know “like-kind” exchanges (aka sect. 1031) can help you avoid paying capital gains taxes if, when selling a home you’ve been renting, for example, you make a new investment of equal or higher value within 180 days of the sale. I thought the new investment could be different from the one you sold, like exchanging real estate for stocks, or to start a business, etc… While some of the people I’ve talked to remain confident this is true, others appear just as confident that your new investment must be of the same type as the one you sold. For example, you could only sell real estate for real estate. Does anybody know who’s right? Thanks.
No! Stocks are never used in a like kind exchange, even for other stocks. Nor can you use a personal residence in a Section 1031 exchange; it MUST be investment property.
Only tangible property is eligible and you must exchange “substantially similar” types of property. You could exchange residential real estate for commercial real estate for example, or one business for another.
If you are considering a Section 1031 exchange I would STRONGLY urge professional assistance. The rules are strict and if you mess it up, you lose the ability to defer the gain. And bear in mind that it is only a deferral of the gain, not an exclusion. And depending upon the numbers, you may not be able to defer all of the gain, only a portion of it.
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no. ‘like kind’ means just that. Like kind means that you trade one type of investment property for another investment property that is like the one your getting rid of. for example one rental for another rental. You can do an exchange where only part of the exchange is like kind and that gets way more detailed than a typical like kind exchange (which is very detailed) If you are getting ready to do this, i suggest you make an appt with an enrolled agent (an enrolled agent a tax preparer who has passed special exams and proven competency.) who will have the expierence to help you with this. It is worth your time and money to do this right. if you mess this up it can cost you thousands of dollars in the long run.
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As a side note, why would you try avoid locking in a 15% capital gain rate when the rates are at historic lows?
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