An Expert Guide to Real Estate Asset Classes

When it comes to making wise financial decisions, information is the primary key. But what does it take to make the right financial decisions?

When looking for the best investment to make, real estate sounds like the most viable business to venture in.

Investing in real estate can turn out to be successful or ruin you. You can’t just venture into any business without learning a thing or two.

In this case, our primary focus is on real estate assets. What exactly do you need to know about real estate asset classes as an investment? Most new investors in real estate don’t have an idea of the different real estate asset classes.

Real estate assets are divided into different categories. These categories are known as property types or asset classes. As a newbie in real estate investment, take note of the different classes before you can make a decision on which one to invest.

It goes beyond doubt that each real estate asset class has its financial benefit. All you need is enough information about the real estate asset classes to make a fruitful decision.

Here is what you should know about real estate asset classes.

1. Commercial

The commercial class mainly comprises of office complexes and skyscrapers. You can use the little funds that you have to invest in commercial buildings. Commercial properties cover a wide range of buildings from single-tenant to multiple-tenant complexes.

So how is commercial buildings a return of investment? Leases given to the clients are for a specified period. The contracts will state the agreement between you and the tenant.

The tenants pay the rental fees according to the amount agreed on the lease. Management is also another issue to focus on when it comes to commercial buildings. Ensure that you have management staff to help in rent collection and maintenance practice.

Leases are also due to change with economic adjustments. Take note of the demographic information and employment growth. This information will help you invest in commercial assets with the least risks.

2. Industrial

It goes without saying what this category entails. Industrial properties cover all buildings designed for industrial purposes.

Industrial properties can be factories for manufacturing and processing. Big industrial warehouses for commercial storage also fall under this category. Ensure that you understand the laws and regulations stated under the industrial act.

So between factories and warehouses, which one is a viable investment? Most industrial leases are long-term and can lead to underappreciated payments.  Understand the driving factors associated with industrial properties before making a decision.

3. Residential

Residential properties can be the best real estate investment to make as long as you have the correct details. They can be single tenant buildings or multi-family properties. The lease is short-term in most cases.

The lease can be adjusted to the benefit of the landlord but with respect to the market rates. With market adjustments, the lease payments can also be renegotiated. Real estate properties in this category can be either leased or sold.

The market for residential properties is driven by demographic trend and population growth. To reduce the risks associated with residential properties, invest in more than one asset.

The risk associated with residential properties can be low since people will always need a roof over their heads.

4. Hospitality

Most properties that fall under this category are hotels and recreational facilities. So what does it take to invest in hospitality properties? These are facilities that provide accommodation, food, and other recreational services to tourists and travelers.

Profitability from hospitality properties comes from the number of tourists and hotel revenues. The driving factors for the hospitality market are tourist population, seasons, and economic growth.

You should also note that both national and global factors drive the hospitality sector. Unpredictable situations such as politics, diseases, and natural disasters also affect the growth of hospitality properties.

5. Land

Land is one of the most lucrative real estate investments beyond a reasonable doubt. When it comes to returning of investments, the land value only appreciates with time. The value of land is always appreciating because people are always looking for a space to settle.

Land as an asset also includes everything found on the ground. Wood, oil, water, and minerals are some of the elements that can increase the value of the land. Land also offers different investment options.

It can be leased out for farming and other agricultural purposes. Resources found on the ground, such as water, minerals, and trees can be sold for added income. Land can also be sold to real estate developers.

If understood correctly, land can prove to be one of the most lucrative real estate investments.

6. Mixed-use Properties

The properties under this category can be used for both residential and commercial purposes. Buildings with offices, retail stores, and residential apartments fall into this category. Mixed-use properties offer great diversity in terms of assets and reducing associated risks.

Understand the nature of the mixed-use property before you invest.

7. Real Estate Asset Classes are Different Investments

We have already reviewed some of the different types of real estates and their market driving factors. However, it isn’t a must that you deal in the properties. You can invest in a property investment company by buying shares.

Find a property investment company that deals in the sale and distribution of real estate properties. Becoming a shareholder in such a company will enable you to earn income in the form of dividends.

The more shares you buy, the more bonuses you receive.


Many businesses fail due to lack of information and complacency. Understand the real estate asset classes before you can break your bank to invest. With the right information, your investment will be successful and secure your financial future.

There are many types of real estate investments to choose from, and it only takes enough knowledge and the willingness to invest. Assess the risks associated with each real estate asset class to avoid losses and increasing liabilities.

You can also check out our blog to learn more about real estate asset classes and investments.