Real Estate Investors are not all the same.

Real Estate Investors and real estate investing have very different motivations and resources. Know which targeted real estate investor leads you need is very important.

There are 3 main types of real estate investor; Commercial Real Estate Investors, Residential real estate investors and Land real estate investors.

Commercial Real Estate Investor category has subgroups:

• Retail
• Office
• Industrial
• Multi-Family

Residential Real Estate Investor includes these subgroups:

• Single Family Rental Property
• Section 8 Rentals
• Vacation Rentals
• Small Multi-Family
• Fix and Flip

Land Real Estate investors include these subgroups

• Land for Commercial development
• Land for Residential development
• Land for farming
• Land for mining

Real estate investing is like dating – there are more options than there are time and money to pursue. Stay in your league, and you’ll likely have a steady, predictable, and productive result.  Get distracted with flash, and you can wind up penniless and alone.

Marketing to the wrong type of real estate investor can be very expensive.

Creating a marketing campaign that targets the exact type of investor with the right pocketbooks is essential.

Many real estate investors are accredited investors who need to be treated as such. Wasting time and effort on the wrong type of real estate investor for your project is not just annoying, it is a waste of valuable opportunities elsewhere.

Definition of Commercial Real Estate Investment: 

Commercial Real Estate is a broad term used to describe the ownership of buildings used to conduct business or generate cash flow, or the acquisition of land for a long term return on investment.

1. It could be a building bought for the purpose of conducting one’s own business.
2. It can be a building an investor purchases to generate leasing income from someone else’s use.
3. It can be a parcel of land acquired to develop the above.

Below is a deeper dive into the types and subtypes of commercial real estate investment, and a brief description of the risks and rewards associated.

Retail – Categories of Commercial Investment for investors

Office – Categories of Commercial Investment

• Class A –  Very high-end finish levels, usually in the tech and finance areas of a city. Rents are above average for the area as these buildings have an element of prestige associated with occupancy.

• Class B – Most common level of finish in good and stable areas. Have the highest level of demand in most market places. Class A properties are not considered competition for Class B properties.

• Class C – Projects that are typically in older areas of town. The buildings have become dated both in terms of form and function. Rents are below market rate, and tenants can be hard to find and retain.

• Medical Office is also a specialized subcategory. This is space specifically designed for tenants in the medical field, and are often part of a development that attracts a variety of medical professionals.

Industrial Real Estate Investors

• Heavy manufacturing: These facilities are designed for major production of products and need to be equipped with industrial-sized tools like cranes, specialized welding equipment, chemical processing, and painting areas. They are heavily customized for the individual users needs.

• Light assembly: These facilities don’t make components, but rather assemble and package them for shipping/storage. The zoning process for these are usually less restrictive than for heavy industrial and can be found in a broader area of a city.

• Warehouse: These projects are commonly proximal to major transportation corridors and are designed for the storage of product. They include shipping docs for semi-truck access, have high ceilings, concrete floors, and consist of mostly open space. They may include refrigeration for cold storage.

• Flex Industrial: This product is as described. It customarily offers a combination of warehouse-style space with office frontage. It is generally smaller – from 1,500-6,000sqft;  20’ roll-up doors in the rear and 8’ drop ceilings in the front office are typical features.

Multi-Family

• High-rise: A building commonly consisting of more than 9 stories. Built exclusively in major metropolitan areas.

• Mid-rise: A multi-story building typically 5-9 stories accessible by elevator.  These projects are high density and normally built in urban areas.

• Garden-style: These are ordinary apartment style projects found in suburban and urban areas. Usually do not exceed 3 stories and are built with green belt areas in the center of the complex.

• Walk-up: These buildings are mostly smaller and have fewer amenities than Garden-style projects. They are usually 1-2 stories with stairs accessing top floor.  4plex concepts are often called walk-ups.
• Manufactured housing community:  Also called mobile home communities.  Residents in these projects, generally rent either just space, or both the space and the manufactured home.
• Specific-purpose/project housing: A wide variety of housing for families and individuals including: student, government-subsidized, retirement, recovery, and special needs.

Residential Real Estate Investment

• Single-Family Rentals: Can be one owner condominiums, townhomes, or typical single-family detached homes. Single-family rental homes are the most common form of real estate investment. They can be either self-managed or professionally managed by a property management company. The lease terms are commonly a minimum of 12 months.

• Section 8 Rentals:  These properties are typical to single-family rentals with one exception. The owner has specifically applied and received special designation as an approved Section 8 home. The tenants are low to no income and the government pays either all or part of the monthly rent. This can be a guaranteed form of income, but can also come with its own unique set of challenges.

• Vacation Rentals:  Can be any single-family home, but comes fully furnished and is available for short term rentals. These types of projects work best in highly desirable areas like near beaches, lakes, or major entertainment districts. Most often these units require professional property management companies.

• Small Multi-Family:  These properties are also called small apartment or walk up complexes; they are configured as a duplex, 3 plex, or Quad. These units often provide a strong cap rate and return if properly managed. However, this type of product is often found in older less desirable areas, where tenant issues are more prevalent. Month-to-month leases are common, so turn-over is higher than with single family

• Fix and Flip: The subject of a million TV series that make this form of investment seem rewarding, simple, and profitable. The concept is simple, but the reality is far more complicated. You just need to buy a property under its actual value, add additional value through upgrades and repairs, and sell the property for a profit within a short period of time. The risks are unexpected repair costs, misunderstanding the post-rehab value, or having a rapid and unexpected change in the overall health of the market.

Land Real Estate Investment

• Land for Commercial development:  Land that is acquired for the purpose of developing a commercial center.  This usually involves working with architects to design plans, and local governments to ensure the appropriate zoning is in place.

• Land for Residential development:  Very similar in process to commercial but with a residential end-user in mind.  Residential development is common in in-fill areas or made possible by the conversion and rezoning of large tracts of farmland or other undeveloped lands.

• Land for farming:  Purchasing farmland is often a great way to buy large tracts of land while receiving some income in form of land rent from the farmer and huge tax breaks from the government based on agriculture use. It is typical for developers to buy farmland, rent it back to the farmer until it receives the zoning approvals it needs to move the project forward, or until the market makes development financially viable.

• Land for mining:  Leasing the mineral rights to a property can provide exceptional cash flow on a long term hold depending on the nature of the minerals available.  Often this is a great multi-generational play, that allows for cash flow, appreciation, and when the minerals run out.

Conclusion

Each type of real estate investor is different and each real estate investment has its own benefits and challenges. When marketing to real estate investors it is essential that you understand who you are marketing to and why. Finding in-market targeted real estate investors to match your offering is a laborious and time-consuming process. Investor leads can help by targeting only the specific real estate investors that suit your offering. Furthermore,  your marketing budget won’t be wasted on the wrong kind of real estate investor