Diversification in Real Estate Sector

The diverse industry of Real estate is known to be the oldest in term of multiplying the assets or we can say the finances. There are adverse arrays to invest in real estate, this advantage in a way sometimes cause confusion that even the top most investors sometimes lack, the knowledge of knowing the right place to invest in says Hirsh Mohindra. If we understand the diverse areas of this sector well in advance, then the real estate industry will become less complicated for investors. There are best ways to invest in this uprising sector which has shown growth even during the pandemic times.

Real estate industry comes with two main components which are the Land, with many subdivision; and the other one is the Improvements, like a single-family house.

Major component’s comprising the real estate sector include the

1. Residential domain

United States witness huge part of the real estate sector covered with the residential domain. This is witnessed from the latest trend showcasing the growth of 50% of U.S. housing market over the last 10 years. This includes majorly investment in Cooperatives (Co-op), Town homes, Duplex, Triplex, Fourplex.

2. Commercial domain

Next up is the commercial real estate (CRE) market which is very well known worldwide and covers majorly the investment in shopping centres office properties, and oversized buildings. Therefore the size of the U.S. commercial real estate market is quit huge approximately $14 trillion which to be precise is half the size of the residential market says Hirsh Mohindra. As everyone needs a place to live just this factors surpasses the residential market of the real estate sector.

Sub parts of the Commercial real estate sector is property used for business purposes majorly the Office spaces like, suburban office parks, and urban office towers, Apartment buildings, home parks, Parking lots and garages and the Movie theatres. The transaction cost of commercial property are quite huge and is usually seen to be divided among partners which majorly include the institutional investors and lenders directly.

3. Industrial Domain

Next up is the industrial real estate domain, which comprises property for business purposes like commercial real estate. This is kind of different real estate class. This is due to its usage. This domain basically includes the Production facilities and food processing centres, also cold stores, warehouses and Freezer forms a part of this real estate segment. Also, we see Power plans and solar generating stations in this domain.

4. Land Domain

Next up is the raw land form which is quite common. This type of vacant land is usually purchased but used later for construction or reselling. It is a type of future planning investment as this type of property usually needs very less taxes and maintenance costs says Hirsh Mohindra. This type include investment in undeveloped raw land, orchards, timberlands, Lots in a subdivision.

These were the properties which comprises the real estate sector. Very few people have full knowledge as where to invest in this sector.

Originally Posted: https://medium.com/hirsh-mohindra-chicago/diversification-in-real-estate-sector-3974c5c243ae