Real estate investing is a goldmine of opportunity. With varying industries, types, and countless real estate niches the opportunity to diversify your portfolio is almost endless.
Real estate niches are simply different types of real estate investments that vary by type. This can vary from real estate type, seller, or buyer profiles for your real estate. For example, one niche in real estate could be vacation rentals, while another could be crowdfunded real estate investments.
These varying niches offer investors opportunities to diversify their portfolio with varying real estate types, and with different investment strategies and methods to maximize profits.
Your next investment opportunity could be hiding in plain sight in some of these unique real estate niches. We explore some unique real estate niches, that could be perfect for your next investment.
Residential Real Estate Niches
One of the most expansive and hot spots for real estate investment opportunities in residential real estate. Residential real estate is one of the most common areas for real estate investment, with lower cost to entry and a variety of opportunities.
Residential real estate investing is one of the most common types of real estate investments. Whether you are looking to make passive income, or a one-time flip there is plenty of real estate niches in residential real estate. Residential real estate investing is an investment property purchased with the goal to profit from either rental, flips, or other forms of investing with residential property.
Your residential investment can vary from houses, apartments, duplexes, or other options but are properties only used as a residence. While most real estate investors are well aware of the large variety of rentals and flips available there are still unique real estate niches you can find. We list some of the residential real estate niches below.
Residential Real Estate Niches:
- Rent-to-own properties
- Long-term rentals
- Short-term rentals
- Vacation rental / Luxury rentals
- Student housing
- Government assistance/Section 8 housing
- House Flipping
- Buy and Holds
Unique Niche: Buy And Holds
Buy and Holds can be a great investment with long-term passive income for those investors who are patient. This is a strategy used by real estate investors seeking to generate recurring rental income and build wealth over the long term, with the goal to hold onto a property for as long as possible. Typically investors purchase a rental property, hold it for 5 years or more, and refinance or sell when and if the time is right. This is often done alongside short-term strategies, like fixing and flipping properties.
Benefits of Buy and Holds
- Build Passive Income Via Rentals
- Property Appreciation Long Term
- Long Term Tax Benefits
Unique Niche: Rent-To-Own
This can actually be used as an exit strategy for a buy and hold, or on its own as a real estate niche. This niche is simply when an investor rents a property to tenants with the option at the end of a period to buy. This gives the investor more flexibility for tenants and the ability to vet buyers before a transaction takes place.
Rent-to-own agreements can be one of the following:
- Lease Option: offering the tenants the option to purchase when the period of rental is complete.
- Lease-Purchase: Where at the end of the period begins the purchase transaction.
Commercial Real Estate Niches
Commercial real estate offers many unique real estate niches, and opportunities, with higher barriers of entry for cost and capital. While it may be more difficult to invest in commercial real estate the returns and opportunities are very desirable.
Investopedia puts it best when defining commercial real estate investing. “Commercial real estate is a property that is used exclusively for business-related purposes or to provide a workspace rather than as a living space. Commercial real estate is leased to tenants to conduct income-generating activities.”
Storefronts, restaurants, or even skyscrapers, are all commercial real estate niches and potential areas of investment. While commercial real estate focuses on leasing to business clients, what clients you lease to, and the property itself can vary. The following commercial real estate niches can be a great starting point for your next investment.
Commercial Real Estate Niches:
- Shopping Centers
- Office Buildings
- Co-working spaces
- Coffee Shops
- Storage units
- Car Washes
- Storage units
Unique Niche: Billboards
While most commercial real estate opportunities focus on leasing to tenants, billboards can offer a low-risk commercial real estate investment. Billboards are a unique real estate niche that focuses on providing visibility for clients, not on actual property amenities. To invest in this real estate niche you will need land with a lot of visibility in busy areas to market a billboard. Billboard maintenance is much easier to maintain than that of office space and may be the perfect real estate niche to start investing in commercial real estate.
Unique Niche: Storage Units
Storage units are a great real estate niche in nearly any market. Many find storage units an appealing investment due to their low overhead costs, minimal maintenance, and high demand. Additionally, storage units are cheaper to build than other commercial investments and require less management than other investments. Whether you choose to develop your own storage unit yourself or invest in a storage REIT, there are plenty of options to get involved in this real estate niche.
Industrial Real Estate Niches
Industrial real estate offers investors unique real estate investment opportunities you can’t find anywhere else. While higher costs of entry, taxes, and insurance may scare off other investors, it also offers investors a unique chance to work with long-term clients, without hands-on management, generating larger and longer passive income than other investments. Industrial real estate can be less affected by trends than other types of real estate and offer unique investments for those willing to invest.
Industrial Real Estate Niches:
- Storage units
- Flex Spaces
- Food Processing Facilities
Unique Niche: Warehouses
Of the industrial real estate niches, a warehouse may be a great option for a first-time investor. Realty Capital Partners reports that the U.S. may need more than 1 billion square feet of additional warehouse space by 2025 in order to support the fast-growing e-commerce demand. Warehouses offer low maintenance, long-term tenants, and have a high demand for online and physical retailers that are ever-expanding. If you are interested in industrial real estate, this may be the niche for you!
Alternative Real Estate Niches
Alternative real estate niches can be perfect for investors who aren’t looking to maintain properties, handle tenants, or other aspects of investments. This could be a chance for first-time investors looking to test the waters of real estate investing, or seasoned investors to diversify. Alternative Real Estate offers investors the chance to diversify their portfolios without some of the high maintenance of other investment types.
Alternative Real Estate Niches:
- Real estate investments trusts, or REITs
- Note Investing
- Short sales
- Foreclosures and foreclosure auctions
- Bank-owned/real estate owned (REO) properties
- Estates and probate
Unique Niche: Note Investing
Note investing is a great way for an investor to diversify their portfolio. This is an easy investment for first-time investors. Note Investing is when a lender of a promissory note wants to free capital for other investments, they will see a note to an investing. Lenders will sell these notes to increase their equity and cash flow. By purchasing a note you can profit from the interest paid on the term of the note.
Note investing offers a way to gain passive income, that is IRA friendly, and has minimal maintenance for the note, as lenders will sometimes offer servicing options when you purchase a note.
No matter if you are a seasoned or first-time investor, you can find new opportunities to invest in any real estate niche. Whether you choose to invest in residential, commercial, industrial, or alternative real estate, you can find an opportunity or niche perfect for you.
It’s important to complete due diligence and market research before you invest in any type of real estate, as no investment is risk-free. Make sure you have a clear understanding of any potential benefits or setbacks an investment may have to be fully prepared for your next investment.
Real Estate Niches Guide:
- Residential Real Estate Niches: Any type of property that has the sole intention of being a residence. This can be any of the following: Rent-to-own properties, Long-term rentals, Short-term rentals, Vacation rental / Luxury rentals, Student housing, Government assistance/Section 8 housing, House Flipping, Wholesaling, or Buy and Holds.
- Commercial Real Estate Niches: Commercial real estate are properties that are leased to tenants to conduct business in. This can be any of the following: Malls, Shopping Centers, Office Buildings, Co-working spaces, Restaurants, Coffee Shops, Storage units, Car Washes, Billboards, or even Land.
- Industrial Real Estate Niches: Similar to commercial properties industrial real estate leases to businesses, but tends to have long-term tenants and less client turnover. This can be any of the following property types: Warehouses, Factories, Flex Spaces, Food Processing Facilities, or Manufacturing.
- Alternative Real Estate Niches: These inve4stments can focus on specific buyer types of properties or just alternative investment types outside of the standard real estate investment properties or investments listed above. This can include any of the following: Real estate investments trusts, or REITs, Note Investing, Short sales, Foreclosure and foreclosure auctions, Bankruptcies, Bank-owned/real estate owned (REO) properties, or Estates and probate investments.
What niche did you find most interesting?