If you’re a new agent or investor, focusing on a single real estate niche will help jump start your business. Or maybe you’ve been in the business for a while but feel like your real estate business plan needs a reboot.
Concentrating your efforts on a single real estate niche will help separate the good clients from the bad ones, and help choose the real estate investments that are right for you.
A real estate niche can be an asset class
One way of thinking about real estate niches is to look at the different types of real estate available. Real estate asset classes can be divided into four categories:
- Special use
There are a lot of different types of real estate that go into each of these four asset classes. To fine-tune your real estate business plan and avoid real estate burnout, you’ll want to break down these big real estate niche asset classes into something smaller.
Small real estate niches make up bigger asset classes
The next steps is to break down the four big asset classes above into sub-classes or smaller real estate niches. Let’s use the commercial real estate asset class avoid as an example.
Some of the types of real estate and activities that fall into the commercial category are:
- Single tenant or NNN
- Apartment buildings
- Property management
You can probably think of more, but you get the idea. Now, let’s take the office real estate niche and break it down a little more.
Office real estate niches
The office real estate niche can be divided up a number of different ways:
- Size of property – single or two levels, midsize, or high rise office building
- By class of property – typical office building classes are A+, A, B, and C
- By how the office building is used – medical, professional services, consumer-related services (such as banking, collections agencies, or telemarketing), and general office use
- Location of property – central business district, suburban office markets, or mixed-use office/residential
Choosing the real estate niche that’s right for you
The types of tenants and the types of owners for each of these office niches are different.
For example, a Class A office building in a central business district will likely be owned by an institutional investor. The types of tenants in this type of building will be white collar and professional service businesses.
The demands and expectations of these property owners and tenants will be much different from the mom-and-pop bookkeeping firm renting space in a smaller office building in the suburbs.
Successfully choosing the real estate niche that’s right for you means understanding your own preferences, strengths, and weaknesses and selecting the best match that will lead to your real estate success.