There are many different property types that you can use to make money in real estate with. The secret is finding one that you love and can throw your heart and soul into:
1.) Raw Land – This is as “raw” as it gets. Buying land in itself usually does not produce cashflow, but can be improved to add value. Land can also be subdivided and sold as well for profit. You can also speculate and sell later at a profit.
2.) Farm Investing – In addition to the land itself, the products that are made on the land can be used to make a profit. Think of agribusiness aka kilimo biashara.
3.) Water/Mineral/Oil/Gas Rights – The cousin of investing in raw land, this is the process of buying and selling a person’s (or company’s) right to use the minerals (or water, stone quarry, oil, gas, etc) on a property.
4.) Single rooms – This is the most common investment for most first time investors. Single rooms are easy to rent and easy to finance. Single rooms may be more difficult to cashflow, and can take a significant amount of time and effort but will eventually payoff.
5.) Small Apartments – Small apartment buildings are made up of between 5-50 units. These properties can be more difficult to finance. However, these properties are excellent in terms of cashflow. They are too small for large, professional REIT’s to invest in (see below) but too large for most novice real estate investors. Additionally, the value of these properties are based on the income they bring in. This creates a huge opportunity for adding value by increasing rent, decreasing expenses, and managing effectively. These properties are a great place to utilize on-sight managers who manage and perform maintenance in exchange for free or decreased rent. At this level, real estate can truly become 90% passive.
6.) Large Apartments – These buildings are the larger, nicer complexes you see in the leaf suburbs, often times in upper-middle class neighborhoods. They often include pools, work-out rooms, full time staff, and high advertising budgets. These properties cost hundreds of millions of shillings to buy but can produce solid returns with minimal hassle.
7.) Large Commercial Office Space – Buying large commercial buildings and renting out office space to business professionals. Usually professionally managed by large property managers.
8.) Small Commercial Office Space – Buying small commercial buildings and renting out office space to business professionals. Often much more hands on.
9.) Industrial Properties- Manufacturing, warehouses, distribution centers, etc.
10.) Mobile Homes – Generally found in areas with big government projects like SGR and can be an inexpensive way to enter the world of real estate investing and can also experience significant cashflow.
11.) Backpackers – simple rooms with multiple beds intended for adventure seekers and hikers who usually will stay overnight.
12.) Motels/Hotels – Especially profitable in tourist friendly areas, renting out rooms in a motel or hotel can provide significant income.