The 35 Best Niches For Real Estate Investing (& How to Choose Yours) (2024)

Table of Contents
Niches vs Strategies Category #1 – PropertyNiches Category #2 –Seller Niches Category #3 – End-User Niches Niche Category #3 – Location How to Choose Your Real Estate Niche Sample Real Estate Investing Niche Your Turn to Choose a Niche Get My Free Real Estate Investing Toolkit! You might also like

The 35 Best Niches For Real Estate Investing (& How to Choose Yours) (1)

Niches pay big bucks. Justthink about the specialized professionals who make the most money like medical surgeons, dentists, technicians, engineers, and contractors. Real estate investing niches work the same way.The more you specialize in niches, the better you do financially.

In the rest of this article, I will share 35 of the best niches for real estate investing. And most importantly I want to help you choose the right one for you.

Let’s get started!

Niches vs Strategies

When you first begin real estate investing, you’ll need to make two big decisions:

  1. Your real estate investment strategy
  2. Your real estate investment niche

I see wealth building sort of like climbing a mountain. The peak is your financial goal, and your strategy is the route you choose to climb up. Strategies include things like fixing-and-flipping houses, holding rentals, wholesaling deals, and investing in private mortgages. They are your specific plans to make money.

If you want to learn more, I wrote an entire article about the best real estate investing strategy.

Niches, on the other hand, are like the vehicle that takes you up the mountain. You could walk up, ride on a horse, fly a helicopter, or use an airplane and parachute in. They all have their pluses and minuses. But each vehicle can potentially get you to the top.

Real estate investing niches work the same way.

Don’t feel like you have to know or like all of the 35 different niches below. The opposite is true. I’m including a long list of choices so that you will know your options. But then you should narrow down your choices to the best 1 to 3 niches that fit your situation and your market. And if you want to add more niches or switch to a different one later, that’s fine too.

To make the 35 niches easier to remember, I’ve separated them into four different categories:

1. Property niches
2. Seller niches
3. End-user niches
4. Location niches

Category #1 – PropertyNiches

The most obvious way to specialize in real estate investing is by property type. Below are the most popular types of investment property.

Keep in mind that authors write entire books on just one of these niches alone! So, if one property type interests you, make a point to study it in more depth.

1. Single-Family Houses

Single-family houses exist on their own lot, and builders construct them on-site (unlike manufactured homes built in a factory). According to the United States Census Bureau, single-family houses make up 60% of all housing in the United States.Because houses are so plentiful and popular, they are still one of the best real estate investing niches.

Certain high-priced markets may not work financially for house rentals. But don’t assume that’s always the case. Look hard in working-class neighborhoods, and go to less trendy neighborhoods just outside of the popular areas. The prices are usually more affordable there. Also get neighborhood advice from local real estate agents and property managers.

Further Reading:

2.Duplexes/Triplexes/Quads

Duplexes (2 units), triplexes (3 units), and quads (4 units) are like hybrids. They are similar to houses because they occupy their own residential lot. But they are similar to apartments buildings because they produce higher rental incomes with lower relative expenses.

Duplexes, triplexes, and quads also benefit from favorable financing. Conventional lenders usually only offer low, fixed interest rates for 30 years on properties with 4 units or less.

Further Reading:

3. Small Apartment Buildings

Definitions differ for this niche, but it’s typically between 5 to 100 units. These buildings are usually too small for the big national apartment investors to mess with. But they are too big for the small, mom-and-pop type of investors. So, they represent a very interesting niche for investors willing to pursue them. Financing for these typically comes from commercial lenders, like local banks.

Further Reading:

4. Large Apartment Buildings

Large apartment buildings, which we’ll define as any building over 100 units, have many advantages. The larger a building, the more economies of scale exist. This means you have income from many units to pay for one roof, one parking lot, one crawl space, one property manager, one maintenance contractor, etc. You also have the benefit of multiplied cash flow from many units. Because the price points are higher, investors typically finance these properties with a combination of commercial loans and capital from partnerships. REITS (Real Estate Investment Trusts) and other large syndications also focus more on this property type.

Further Reading:

5. Condos and Townhomes

Condos and townhomes are individual units that are part of a larger complex of units. Because condos are more affordable to build, they may be the only affordable investment property available in high-priced markets. As with all niches, you must study the potential pitfalls of condo and townhouse investing. Particularly with condos, you should perform another level of due diligence on the condo association to study its regulations and to ensure its financial health.

Further Reading:

6. Mobile Homes on Land

Mobile homes (aka manufactured homes) are built in a factory and transported to a piece of land. The manufacturer can typically build and transport them for less than the cost of a home builton-site. These cost savings and fast pricedepreciation (like cars) give investors lower purchase prices and higher cash flow from rentals.

This particular niche includes homes on lots, not in parks. And they come in two varieties: single wides and double wides. Single wides are usually less than 18′ wide so they can be transported in one piece to a site. Doublewides are usually 20′ wide or more (and often over 2,000 square feet), which means they must be transported in pieces.

Financing for mobile homes is not impossible, but it’s much more limited than with site-constructed buildings. So, count on paying cash or using creative financing to buy these properties.

Further Reading:

7. Mobile Home Parks

Mobile home parks typically include multiple single wide mobile homes or RVs on one lot. Sometimes the investor owns the land and the homes, but other times the park owner simply leases spaces to individual owners of homes. This niche varies from tiny parks with several homes to enormous parks with hundreds of homes.

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This can be a very profitable niche with extremely high cash on cash returns. But the management demand is often much higher for these properties. Solid business systems and an excellent team are a must.

Further Reading:

8. Commercial– Retail

Commercial retail investors own the buildingswhere we shop and eat at restaurants. For example, the corner drug store is not usually owned by Walgreens or CVS. Instead, an investor pays for the land and building construction, and the drug store company leases the entire property back for a long period of time (often 15-20 years or more). Investors in this niche normally use something callednet leases, where the tenant pays the taxes, insurance, and maintenance.

The dynamics of commercial real estate are much different than residential properties, so be sure to do a lot of learning and get help before jumping into this niche.

Further Reading:

9. Commercial – Office

Commercial office investments are similar to retail, except the buildings are used for professional or other offices instead of retail. This niche ranges from the single tenant office building, like an insurance agent office, to large skyscrapers with offices expanding up into the clouds. REITS, funds, and other large syndications usually own the bigger commercial office properties. But the small properties are often owned by local, small investors and business operators (like an insurance agent or dentist).

Further Reading:

10. Commercial – Industrial

Commercial industrial investments house manufacturing and other industrial operations. These buildings can be enormous, covering hundreds of thousands of square feet. As you might imagine, this is a more specialized niche and not usually the entry point for new investors.

11. Commercial – Self-Storage

People like stuff and they need to store it somewhere. Self-storage rental complexes fill this enormous need. Many investors like this niche because there are no tenants living there to complain about toilet leaks or other problems. The building construction is also relatively simple (basically glorified garages), making repairs and maintenance easy. It’s also not the sexiest or most-well known of property investment types, so at times competition can be lower than other niches.

Further Reading:

12. Land

Real estate is not just the building or improvements. It’s also the land underneath. Many investors specialize in land investing, and there are smaller niches within this broader niche. The smaller niches include land development (either putting land together or sub-dividing into pieces), timber, agriculture, land leases, in-fill lots, and more.

I like land, but make sure you have a plan for how to get out before getting in. Land does not always produce regular rental income like other property types, so you have to have some cash and staying power in order to hold on to the land long enough to make a profit. The first link below discusses a very interesting angle of buying land and seller financing it for cash flow.

Further Reading:

13. Mineral, Air, and Other PropertyRights

Did you know that you can not own the land or the building and STILL make money with real estate? Yep. Every piece of real estate includes a bundle of many rights, which include things like mineral rights under the earth (like right to dig for oil or gold), riparian rights (access and use of water), grazing rights for cattle, and even air rights. In New York City, for example, many smaller building owners sell their air rights (the ability to build above their current building) to other developers. Some investors specialize in owning, buying, and selling these rights.

14. Syndication/Private Partnership

This niche is not actually a property type itself, but it’s a way for a small or large group of people to invest together. The shared ownership could be of many of the other property niches already mentioned. As opposed to public REITs (the next niche), syndications are typically organized between private parties.

Further Reading:

15. REITs (Real Estate Investment Trusts)

REITs are publicly traded entities very much like stock mutual funds. They own a larger, more diverse basket of properties in one or more of the property niches above. Many investors who want more liquid, passive, and diversified real estate investments choose this niche.

Further Reading:

Category #2 –Seller Niches

Instead of specializing in a certain type of property, you could also choose a niche based onthe source of your property purchase – the seller.

Seller niches represent situations in life that cause people to want to sell. I won’t be providing reading recommendations for these niches. But in the future on my newsletter, I will share more about these niches since I’ve used most of them myself.

Here are the property seller niches:

16. Preforeclosures/Short Sales

When property owners fall behind on their mortgage payments,eventually the lender begins legal action (aka foreclosure) to take back the property. The period between the payments falling behind and the actual foreclosure auction is called preforeclosure. This is a potentially profitable niche because typically the property owner is motivated to sell rather than face the hassle, risk, and embarrassment of a foreclosure.

The lender will also sometimes agree to a short sale, which means they will accept less than the full balance owed on the existing mortgage. Short sales work especially well if the lender is not a first mortgage (like a line of credit or other junior liens) because could lose their entire investment at the auction. Short sales also work if the property condition is bad enough to reduce the current market value below the loan balance.

17. Foreclosure Auctions

Although the process is different in every state or province, a foreclosure usually ends with an auction where a judge legally offers the property for sale. The public can bid at this auction, but the price is set by the lender to ensure it covers its loan and costs. If no one in the public bids high enough, the lender then becomes the owner. Some investors specialize inforeclosure auctions and purchase incredible deals. But there are many legal, title, and property pitfalls towatch out for, so definitely do your homework and get expert assistance.

18. Bank Owned/REO

This niche includes the properties owned by banks after a foreclosure auction. REO stands for “real estate owned,” the name for the section of a bank’s balance sheet where these properties are listed. Typically banks make money from interest on loans and not from realestate. So, they will often list the properties at more aggressive prices to sell them quickly. You’ll usually find these properties through special REO listing agents and on the MLS (multiple listing service). Although there are always bank owned properties, the strength of the niche is cyclical depending on how many properties banks have in inventory. You’ll want to also have a clear plan to finance REO properties so that you can move quickly when an opportunity arrises.

19. Bankruptcy

Bankruptcy is a legal process for individuals or businesses with financial difficulties. It allows them to either eliminate (Chapter 7 for individuals) or repay (Chapter 13 for individuals) their obligations using the protection of a federal bankruptcy court. This is a real estate investing niche because sometimes the individuals or businesses in bankruptcy need to sell their properties. Occasionally you can buy these bankruptcy properties at very attractive prices.

20. Burned Out Landlords

I have had a lot of success buying investmentproperty from burned out landlords. Not all landlords enjoy owning property, particularly if they don’t study the business, assemble a solid team, or build good systems. If you catch landlords at the right time, like when they just had to evict an awful tenant who tore up their property, you can make a good deal.

21. Estates/Probate

People are born, and people die. That’s a fact of life. Another fact of life is that some people who die own real estate, and the heirs must decide what to do with it. Very often, the heirs decide to liquidate the property instead of keeping it. This presents an opportunity for investors because the heirs may be long distance and the property may need work in order to maximize its value. Offering the service of purchasing real estate from heirs can be a very profitable niche.

22. Fire or Water Damage

Damage from fire or water is a very traumatic event. Even assuming that no one is hurt, the clean-up, insurance claims, and reconstruction are very difficult for the owner of the property. If the owner failed to have insurance, the situation becomes even worse. They may be forced to sell at a drastic discount because no one can move into the property as-is. But even with insurance, some people choose not to rebuild and just sell the property. In either case, a real estate investor who knows how to solve these types of problems can create an interesting and profitable niche.

23. Code Violations

Most towns and municipalities have codes about the condition of the building and property within their borders. And the more proactive towns have staff members who enforce and give citations to owners who don’t fix these problems. As with all citations, these code violations should be public record. You as an investor can learn which properties have problems, and then you can offer to buy the property as a solution. This is a niche where you make a profit while solving a problem for the owner, the town staff, and the neighbors around the property.

24. Divorce

Unfortunately, divorce is another one of those facts of life. Andsometimes the result of a divorce is the liquidation of property. Some real estate investors specialize in purchasing properties from people needing to sell quickly without the publicity and hassle of listing it on the open market.

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25. Tax Delinquencies

The top source of revenue for most local governments is property taxes. When property owners don’t pay their taxes, the local authorities don’t get their money. To solve this problem, the local governments collect the taxes through various delinquent tax processes.

In my state of South Carolina, for example, the process works like this. After 10 months the local tax collector auctions off your property. Investors at the auction purchase atax lien. The property owner can redeem the property within 12 months, but he must pay 12% interest to the investor. If the owner does not pay for the redemption, the investor instead gets a tax deed to the property.

So, you either get interest or a deed (although it’s not always a clear, marketable title). Not bad alternatives!

Every state has a different procedure, but as a real estate investor, you can study the process and buy properties before, during, or after the auction. It can be a very profitable niche.

Category #3 – End-User Niches

End-users are the customers who really drive the real estate investing business. They are the tenants and buyers who live in investment properties. So, it makes sense to specialize in a niche that serves certain groups of customers.

But keep in mind that specialization in a niche is not the same asdiscrimination. Fair Housing Laws (and common decency) prohibit refusing a housing customer based on criteria such as race, religion, national origin, familial status, age, disability, handicap, or sex. You can make plenty of money while still treating people fairly.

Instead, these niches are about proactively buying properties and locations that will appeal to certain end users. Here are some ideasof end-user niches.

26. Long-term Rentals

This is one of my favorite niches. It’s all about purchasing rentals that attract quality tenants that stay for years (often 5-10 or more). The biggest rental expenses occur during turnovers between tenants. So, if you can build a niche of long-term rentals, you will minimize your expenses, save yourself a lot of hassle, and build more wealth over the long run.

There is not one single property type that fits this category. It will dependon your location. In my area, houses in good locations with lots of storage tend to attract the long-term renters. In some urban areas, a nice apartment within walking distance to a beautiful park and coffee shops might do the same thing. You’ll have to study your market to discover the opportunities in this niche.

Further Reading:

  • The book I referenced earlier, Building Wealth One House at a Time, focuses on this niche using single family houses.

27. Airbnb (Short-Term Rentals)

Short-term rentals have become very popular thanks to the popularity of website Airbnb. This niche fills the gap between hotels and long-term rentals. If an occupant wants to stay somewhere for a few days or as long as a month, Airbnb lets them stay in a home-like setting instead of a cramped hotel.

As an investor, Airbnb allows you to rent your home, basem*nt, spare bedroom, garage apartment, yurt, boat, or any other creative residence. Short-term rentals may achieve higher rental rates than a long term rental. But on the downside, there is a lot more work and turnover in order to achieve this rent.

Further Reading:

28. Vacation Rentals

This niche has some crossover with AirBnB,but it is focused more on purely vacation areas like beaches, mountains, and other attractions. VRBO.com (vacation rental by owner) is the popular website in this space. I’m admittedly not a fan of vacation rental investing. I’ve seen numbers first hand on several occasions, and the actual numbers rarely look as rosy as the emotional appeal that got the investor hooked in the first place. But with that said, people certainly make money in every niche. So, if you’re interested, dig in and do your homework.

Further Reading:

29. Student Rentals

I know this niche very well as an investor in a college town myself. Basically, in this niche you focus on investing in college towns or parts of bigger cities where university students live. Like all niches, it has its positives and negatives.

On the positive side, enrollments tend to be steady or rising in most universities. This supplies a steady stream of tenants for your properties. And most tenants or their parents are credit worthy, so payment issues are rare. On the negative side, tenants move often (like every year or two), so there is a lot of turnoverand related costs. The business is also more management intensive than long-term rentals because the tenants are not typically as self-reliant.

Further Reading:

30. Section 8/Government Assistance

One of the programs funded by our federal and local governments are housing rent subsidies. These include the federal program, called Section 8, and other local programs administered by states and towns. These subsidies give qualified tenants vouchers that can be used to pay part or all of rent at privately owned rental properties. Obviously, this benefits rental owners because the government will pay its bills (unlike many tenants)! And depending upon the location, you could get a higher rent price compared with renting without vouchers (although the rent price must be justified in the market). Tenants also tend to stay longer because other good propertieswilling to accept vouchers are not easy to find. One of the primary challenges of subsidized rentals is dealing with the bureaucracy, paperwork, and annual inspections of the agency who pays the bills.

Further Reading:

31. Rent-to-Own and Seller Financing

This is the niche of turning renters into homeowners. There are many variations of this niche, and some are less than ethical when tenant-buyers are taken advantage of. But when done correctly this can be a wonderful way to sell your investment property with minimal expenses while also helping a renter who wants to become a homeowner.

In some cases, the tenant cashes you out with a new loan after 1-2 years. But you could also offer seller financing, receive a down payment, and collect principal and interest payments well into the future.

The paperwork and legal details of this niche are a little tricky. And that’s the biggest challenge. Before using lease options or seller financing, you should always consult with a local attorney knowledgeable about these contracts.

Further Reading:

32. Special Needs Groups

This niche provides housing to various groups of individuals with disabilities. While also serving an important community need, the rentals can be profitable by renting separately by the bedroom instead of as one property.

I am not an expert in this niche, but it has piqued my curiosity. What I do know is that you will need to work directly with local non-profits who specialize in supporting the groups of individuals you intend to rent to. You will also have to consider specific modifications (like wider doorways, access to bathrooms, etc) depending upon your tenants.

Further Reading:This niche is not extremely well known, so you’ll have to piece together information.

Niche Category #3 – Location

Your real estate investing location is the final category of real estate investing niche. This is actually a MUCH bigger topic (see my comprehensive guide How to Pick the Ideal Location For Investment Properties or myYouTube playlist).But here I’ll list some of the top ways to focus or niche your real estate investing by location.

33. Region of the Country

Investing in different regions are not equally lucrative. You have to choose a general region that will make sense for investments. First, housing prices in expensive regions tend to outpace rents, so as a rental investor you will receive much lower cash flow as a percentage of your purchase price. Second, some regions have better long-term prospects than others economically. If the jobs and population are moving out of a region (like they did for decades in Detroit), you probably want to think twice before investing there.

Further Reading:

34. City/Town

Even within a region that has good fundamentals for real estate investing, certain towns will be better than others. First, avoid overly restrictive local regulations and taxes. Some cities have restrictive rental laws, likerent controls, yearly inspections, and licenses. Others have extremely high property taxes compared to towns very close by. Second, look for municipalities with smart planning and public infrastructure investments. Smart local government affects long-term quality of life and real estate values. And finally, get on the ground and figure out the popular towns and amenities in an area. Often you can find an up and coming town not quite priced as highly as a similar one nearby.

Further Reading:

35. School District, Neighborhoods, & Amenities

Within every town, certain locations will be more popular than others. School districts, parks, greenways, public spaces, commercial centers, and other amenities can make locations more popular (and more profitable). Or in some cases, undesirable qualities like crime, traffic, smells from factories, or noise can make a location less popular. The only way to figure out for sure is by getting out on the street and becoming a customer. You study locations street by street, neighborhood by neighborhood to find the pockets of opportunity. I’ve found that the highest priced neighborhoods aren’t usually the best opportunity. Instead, you can buy in less popular neighborhoods nearby that havesimilar qualities. These nearby neighborhoods havebetter cash flow and tend to appreciate more rapidly.

Further Reading:

  • The free website Zillow.com and the companion book Zillow Talk are both very helpful when studying neighborhoods.
  • Trulia.com offers great crime mapsto study the safety ofan area. Walkscore.com shows which neighborhoods are most walkable (and thus most attractive).
  • Greatschools.org rates local schools, although it always pays to ask around locally to find out for sure.

How to Choose Your Real Estate Niche

We’ve just journeyed through a list of 35 potential real estate investing niches.Are you overwhelmed yet?!

Don’t worry. You don’t have to be.

Your choice of a niche will depend first of all on your unique circ*mstances, skills, and interests. But it will also dependon the market opportunities in the place and time you choose to invest.

To find your niche, I recommend the following approach, which I modeled afterthe hedgehog concept in the excellent business book Good to Greatby Jim Collins.

Basically, you need to ask and answer three questions.

Which niche …

  1. interests and excites me?
  2. uses my existing skills, strengths, or expertise?
  3. meets a clear need in my target marketplace?

The following diagram explains the three questions visually:

The 35 Best Niches For Real Estate Investing (& How to Choose Yours) (2)

It’s ok to start with just one of the three parts of the circle in the short run. But over the long run, you’ll also want to find a niche that allows you to match all three criteria.

For example, you may find a niche that uses your skills and makes money, but if it doesn’t excite you, I doubt you’ll stick with it. And this means you won’t be in the niche long enough to become an expert and to make good money.

Now that you have a framework to help you choose your niche,let’s look at an example.

Sample Real Estate Investing Niche

Let’s say you read my article on real estate strategies, and you decide to buy and hold rental properties. You plan to buy three properties and then use the rental debt snowballto own your properties free and clear.

You read all of the niches above and ask yourself the three questions:

Which niche …

  1. interests and excites me?
  2. uses my existing skills, strengths, or expertise?
  3. meets a clear need in my target marketplace?

Youare excited about the idea of owning apartment buildings. But your market does not have a large inventory of quality apartments. And you also don’t have experience or expertise yet with that property type.

Instead, you decide on the small multi-family niche. You’ve spotted many older brick duplexes and triplexes during your drive through local neighborhoods. You also learned that these properties qualify for conventional financing with low-interest rates and long terms. And your good credit and stable job history will help you qualify for these loans.

You also decide to focus on a niche by location. Many of the rentals you spotted are near the popular new greenway walking and biking trail in town. You notice an opportunity because properties area little run-down and ripe for remodeling and raising the rent. The prices are also not as high as the nearby, trendier neighborhoods.

This combination of niches – small multi-family properties anda location near the greenway– gives you a very specific focus for your real estate investing. All of the main parts of your real estate business, like financing, marketing, property management, and construction will become easier because of this choice.

For example, it would be very easy to generate a mailing list of owners for these properties. You could use a list building website like ListSource.com or MelissaData.comand then send letters to those owners asking to buy their property. You could also ask your real estate agent to monitor the MLS for similar properties in that location.

Your education and next steps will also be much clearer. And clarity breeds confidence and momentum for your entire real estate investing business.

Your Turn to Choose a Niche

The key to finding your niche is to stay flexible. Be willing to experiment. And just get started.

You won’t find the perfect niche right away, but the process of focusingwill teach you more than you ever imagined.

I have personally switched my niches many times during my 14-year real estate investing career. But each time I refocused, I did better financially as a result.

I hope the tools, examples, and lists I’ve shared above will help you move forward. Now it’s your turn to take the ideas you’ve learned and translate them to your own real estate investing business.

If I can help with additional questions or clarifications, please leave them in the comments section below.

What niches make the most sense for you? Have you specialized in one or more of the niches I’ve listed and found success? Are there any niches I’ve missed?

I look forward to hearing from you!

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