What Are The Types Of Rental Properties? Which Is Right For Your Needs:

  • By: Peter Parker
  • Time to read: 5 min.
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Rental properties can be found in different forms and sizes. Some properties are high-risk while some are considered safe for investment.

One has to select the right property depending on the financial goals, the purpose of investment, and the risk appetite. 

Understanding the major types of rental properties will help you make an informed decision about which type of property to invest in. Here is a short description of different types of rental properties. 

Rental properties can be broadly classified into 

  • Residential rental properties 
  • Commercial rental properties

There are several subtypes within each category. Each type of property has its own pros and cons. Let’s take a deep dive into types of rental properties and their subtypes. 

What are the types of residential properties?

Residential rental properties are mainly used for residential purposes. The renters have to live in the property and cannot use it for commercial purposes like running a business.

There are several types of residential properties depending on their style and size. Here are some of the most popular types of residential properties. 

Single-family homes

Single-family homes or SFHs are the most common types of residential rental properties in the U.S. These homes can accommodate one family and are generally standalone. ( They do not share walls with other units.)

Investing in SFHs is suitable for first-time investors as they are affordable and it is easy to get bank loans. It is also a lot easier to sell single-family homes as there are both investors and homebuyers in the buyer pool. 

Multi-family real estate

Multi-family real estate includes homes that have more than one residential unit.

Small multi-family properties have two to four units, while the larger properties have more than 5 units. 

Here are some types of multi-family real estate

  1. Low-rise apartments – A low-rise apartment complex has several units spread across one to four floors. Low-rise apartments are low maintenance and provide privacy and security to the inhabitants as there are only a few families residing in the building. 
  1. Apartment communities –  Apartment communities include high-rise buildings or vast apartment complexes with several housing units. Large apartment communities provide multiple amenities within the complex and are preferred by renters. 
  1. Condo -A condo is similar to an apartment and a single-family home. A condo has a specific owner just like a single-family home but unlike SFHs, a condo is a residential unit within a large complex. 
  1. Townhouse or Rowhouse – A townhouse or a rowhouse is a residential property that combines the features of an apartment and a single-family home. A townhome is generally a part of a large community and generally contains two stories. The house is built in such a way that it shares at least one wall with the neighboring house. 
  1. Duplex homes – Duplex homes are multi-family properties that have two residential units in the same building. Each unit in a duplex has its own entrance but they share common walls. Duplex homes usually offer plenty of outdoor space and privacy. 

Luxury properties

Luxury properties are aimed exclusively at wealthy renters. They can be either single-family homes or multi-unit properties like apartments or rowhouses.

Luxury properties have modern amenities and top-class interiors that match the tastes of wealthy renters. Luxury properties are considered a high-risk investment as it is hard to rent out in comparison to other types of properties. 

Vacation homes

Vacation homes can also be SFHs or multi-unit real estate. They are intended for short stays and can be any of the above-mentioned types of properties.

Vacation homes are generally found in coastal areas and popular tourist spots. Vacation rentals are highly seasonal as you may find renters only during the peak tourist season. 

Types of commercial rental properties

Commercial rental properties are intended for commercial purposes. They can be offices, retail spaces, restaurants, or warehouses. There are several types of commercial rental properties. Some of them are 

Office space

Office spaces can be single-tenant or multi-tenant properties. Some office buildings are also built to suit. They are broadly classified into urban and suburban buildings.

Urban office buildings are found in the cities and generally include huge skyscrapers and high-rises. Suburban office buildings are smaller than urban offices and are located outside the city center.

We can also find suburban office parks that house several mid-rise office buildings into a single campus. 


Retail buildings are targeted at retail stores, restaurants, banks, shopping areas, etc. They can be large multi-tenant retail buildings or standalone single-tenant buildings. Some types of retail buildings are –

  1. Malls
  2. Lifestyle centers
  3. Factory outlets
  4. Community centers
  5. Power centers
  6. Neighborhood stores
  7. Convenience centers
  8. Mixed-use retail                           

Industrial buildings

Industrial buildings are located outside the urban areas and house industrial operations. They are generally situated along the major transportation routes as it becomes easier to transport raw materials and finished products.

There can be large industrial buildings or industrial parks that house several small industrial buildings. Some types of industrial properties are –

  1. Heavy manufacturing units
  2. Light assembly units
  3. Bulk warehouses
  4. R&D facilities
  5. Data centers
  6. Showrooms


The hotel sector includes all establishments that provide accommodation, meals, or other services for tourists and travelers.

Hotels can be classified as individual boutique hotels or flagged hotels that are associated with major hotel chains such as Marriott. Some types of hotels are 

  1. Limited service hotels
  2. Boutique hotels
  3. Casinos
  4. Extended-stay hotels
  5. Holiday homes
  6. Resorts

Mixed-use properties

Mixed-use properties are a combination of the above properties. A typical mixed-use property includes office spaces, warehouses, and retail or industrial properties. 

An example of a mixed-use property can be retail spaces with offices and warehouses. 


Greenfield land is an undeveloped piece of land such as a pasture or a farm. Examples of greenfield land include orchards, ranches, animal farms, etc. There are two types of land – 

  1. Infill lands are undeveloped lands in big cities. 
  2. Brownfield lands are plots that were previously used for industrial or commercial purposes but are available for redevelopment.            

Special purpose real estate

There are some types of commercial property other than those mentioned above. Such properties fall under the category of special purpose real estate. Amusement parks, stadiums, theaters, zoos, parking lots, etc. fall under this category. 

Understanding the different types of properties is crucial to making informed investment choices.

It is advisable to know the pros and cons of different types of properties in detail and choose the best property that suits your investment goals, ROI expectations, risk appetite, and investment budget.