Guide to your first real estate investment: how to choose the right type of property?

Choosing the type of property is one of the most important decisions for a first investment, as it directly determines liquidity, management costs, and the pool of potential tenants. Before the purchase itself, it is necessary to clearly define the investment goal — stable monthly rental income, long-term value growth, or a combination of both — because different types of properties respond to these goals in different ways. For most first-time investors, a smaller, liquid apartment in a city with clear rental demand represents a safer entry than larger, niche, or specialized properties.

The first investment property purchase differs from buying a home for personal residence — here, it's not crucial what you personally like, but what will be a sought-after and profitable choice for the rental or resale market. Many novice investors choose a property type based on feeling or habit, instead of a clear analysis of the goal and market, which later complicates management or slows down the return on investment. In this guide, we walk you through the key steps of choosing the right type of property for your first investment — from defining your goal, comparing apartments and houses, to selecting property size and assessing whether a residential or commercial option is a better choice for you.

Contents

• Before choosing a type: define your investment goal
• Apartment or house: differences for an investor
• Small or larger apartment: liquidity and tenant reach
• Residential or commercial property
• New build or existing property
• How to match property type with location and target audience
• How Regent can help you
• Frequently Asked Questions

Key Insights

• The choice of property type must stem from a clearly defined investment goal, not the other way around.
• Smaller, more liquid apartments generally represent a safer entry into investing than larger or niche properties.
• For a first investment, an apartment is generally a more practical choice than a house due to lower maintenance and a wider pool of tenants.
• Commercial space carries a different, usually higher risk of vacancy between tenants than residential property.
• New builds and existing properties have different advantages depending on the budget and investment time horizon.
• The property type should also match the location and the profile of the target audience who will rent it.

Before choosing a type: define your investment goal

Before you start viewing specific properties, it's useful to clearly define what you actually expect from the investment. Investment goals generally boil down to three basic approaches: stable monthly rental income, long-term property value growth (capital gain), or a combination of both. A property type ideal for one goal may not be a good choice for another — for example, a property in a developing area might yield significant value growth over the years, but in the meantime generate more modest rental income due to less developed infrastructure. It's equally important to honestly assess how much time and energy you are willing to invest in property management. Some property types — for instance, smaller apartments with long-term leases — require relatively little daily engagement, while others, such as properties intended for short-term tourist rental or co-living concepts, demand more active and regular management.

Professional tip: Before viewing properties, write down your primary goal in one sentence — for example, "stable monthly income with minimal involvement" or "value growth while accepting greater involvement". This sentence will later facilitate the comparison of different property types.

Apartment or house: differences for an investor

An apartment and a house as investment properties carry a significantly different risk and management profile. An apartment is generally more liquid — it's easier to sell or rent because there's a wider pool of interested buyers and tenants, and the maintenance costs of common parts of the building (reserve fund, facade, elevator) are shared with all co-owners. For a first-time investor, this often means a more predictable and simpler form of ownership.A house, on the other hand, places the entire responsibility for maintenance on the owner, but can open access to specific niches — long-term family rentals, holiday homes intended for short-term tourist rentals, or renovation projects with the potential for greater added value. These niches can be profitable, but generally require more market knowledge and a higher tolerance for risk, so it's more reasonable to consider them only after your first investment experience.

Professional tip: If this is your first investment purchase, think twice before choosing a house that requires major renovation — the combination of an unknown market and unknown renovation costs doubles the risk of an unplanned budget overrun.

Small or larger apartment: liquidity and tenant reach

Within the apartment category itself, the size of the property directly affects liquidity and market reach. Smaller apartments — studios and one-bedroom apartments — generally attract a wider range of tenants (students, young professionals, couples without children) and require lower initial investment, making them a more accessible entry into investing. Due to their lower price and broader demand, such properties are usually easier and faster to sell if the investor later decides to exit the investment. Larger apartments (two-bedroom and three-bedroom) can generate higher absolute monthly rental income, but with a narrower pool of interested tenants — primarily families — which means a longer period of searching for a new tenant between contracts and slower sales in case of exiting the investment. The choice of apartment size is therefore directly related to the question of liquidity we posed in the first section of this guide.

Professional tip: If you are investing for the first time and your budget allows, consider a smaller apartment in a good location instead of a larger apartment in an average location — liquidity and ease of renting often prove more important than additional square footage.

Residential or commercial property

Commercial space (office, shop, warehouse) can generate a stable and, as a rule, longer-term lease agreement than residential property, as business tenants often sign multi-year contracts. However, this type of investment also carries specific risks: greater dependence on location and economic trends, more difficulty finding a new tenant in case of contract termination, and periods of vacant space that can last longer than with residential rentals. The legal framework for commercial property leases also differs from residential leases, including different terms for contracting and termination of agreements. For a first investment, residential property generally represents a more accessible and predictable choice — the residential rental market is more transparent, it's easier to estimate realistic rent by comparing similar apartments in the area, and the pool of potential tenants is regularly wider than for commercial space.

Professional tip: Leave commercial space for your second or third investment, when you already have experience with lease management and a better understanding of the local market — a first investment is not the ideal place to learn in a more unpredictable market segment.

New build or existing property

New construction typically comes with lower maintenance costs in the first few years, better energy efficiency, and the option for the investor to choose the layout and equipment of the space during the construction phase. The disadvantage is that new builds generally have a higher initial price per square meter, and when buying during construction, there is also the risk of delayed occupancy. An existing property often offers a lower initial price and the possibility of immediate rental occupancy, without waiting for construction to be completed. On the other hand, older properties may require additional investment in renovation or replacement of installations, which should be included in the initial investment budget. The choice between these two approaches primarily depends on the available budget, the desired time horizon until the first rental income, and the willingness to make additional investments in property furnishing.

Professional tip: If you choose an existing property, include an assessment of the condition of installations and common parts of the building in your budget before purchasing — an unexpected renovation cost can significantly alter the actual profitability of the investment.

How to match property type with location and target audience

The type of property you choose should also match the location and the profile of people who live or work there. A small apartment near a university will naturally attract a student population, while the same type of apartment in a business district will attract young professionals. A house on the coast is suitable for seasonal tourist rental, while a family house in a quieter suburb is appropriate for long-term family rental. Before buying, it's useful to research who is currently renting similar properties in the observed vicinity and how long such properties remain vacant between tenants — this is a practical indicator of the real demand for the chosen property type in that location, better than assumptions based solely on a general impression of the city or neighborhood.

Professional tip: Before making a final decision, spend half an hour browsing current rental listings for similar properties in the immediate vicinity — you will quickly gain a realistic sense of demand and the range of rental prices for that type of property.

How Regent can help you

Choosing the right property type for a first investment requires insight into the local rental market, which is difficult to gain without experience. From working with clients, we see that first-time investors most often underestimate the importance of liquidity and demand in a specific location, focusing instead on the current price per square meter. Our team helps you align your investment goal, budget, and property type selection with the real state of the rental market in the observed area. If you are planning your first investment purchase, contact our team or see what buying with Regent looks like.

Frequently asked questions

What is the best type of property for a first investment?There is no universally best type — the answer depends on your budget, desired level of involvement in management, and target rental audience. For most first-time investors, a smaller, more liquid apartment in a city with clear rental demand represents a safer entry than larger or niche properties.Is it better to buy an apartment or a house as a first investment?For a first investment, an apartment is generally a more practical choice because it is more liquid, easier to maintain, and has a wider pool of potential tenants. A house can be a good choice for specific niches, such as family rentals or tourist accommodation, but it requires more maintenance and a narrower target audience.Is it worth buying a smaller or larger apartment for investment?Smaller apartments (studios, one-bedroom apartments) are generally more liquid, have a wider pool of tenants, and require lower initial investment, making them more accessible for a first investment. Larger apartments can generate higher absolute rental income, but with a narrower pool of interested tenants and slower sales in case of exiting the investment.Should one invest in a new build or an existing property for the first time?Both approaches have advantages: new builds typically come with lower maintenance costs and energy efficiency, while an existing property often offers a lower initial price and the possibility of immediate rental occupancy. The choice depends on your budget, time horizon, and readiness for potential additional furnishing.How do I know if a property type is suitable for my investment goal?First, define your goal — do you want stable monthly rental income, property value growth over time, or a combination of both? A property type that suits one goal may not suit another, so a clearly defined goal is a prerequisite for a good choice.Is commercial space a good option for a first investment?Commercial space can generate stable long-term income, but it carries specific risks — longer periods of vacancy between tenants, greater dependence on location and economic trends, and a different legal framework for leases than residential property. For a first investment, residential property is generally a more accessible and predictable choice.

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