Real Estate Niches, and How to Get a Profitable One

Taking advantage of and focusing on a particular real estate niche can be very beneficial.

It can also increase your chances of success if you are not already a huge company that caters to a broader market.

This article will give you the general definition of a real estate niche, the downsides and upsides, and a matrix overview of 73 different types of real estate niches.

This matrix will allow you to generate and brainstorm new real estate niches.

Additionally, I analyzed all the existing real estate niches to find the most profitable ones and what criteria to apply to find a profitable one.

 

The Definition of a (Real Estate) Niche Market

While there are different opinions about pronouncing the term “niche,” the situation looks better and less controversial when defining a niche market.

It is a subgroup or segment of a larger market with its own demands and preferences.

By focusing on niche markets, businesses can often provide better solutions to the needs of specific consumers than competitors targeting a larger or broader audience.

These audiences are often overlooked, and for the same reason, the loyalty of those customers to niche-focused businesses can be higher.

For instance, a real estate developer could focus on building only green homes under a certain green building standard instead of building just properties in a specific price range.

 

How to Get and Develop a Profitable Real Estate Niche

Let’s first look at how Investopedia defines “profitable” to know what to consider regarding real estate niches.

“While profit is an absolute amount, profitability is a relative one. It is the metric used to determine the scope of a company’s profit in relation to the size of the business.

Profitability is a measurement of efficiency – and ultimately its success or failure.” (source)

So the core element to keep in mind is efficiency, and again Investopedia defines efficiency as:

“…the ability to achieve an end goal with little to no waste, effort, or energy. Being efficient means you can achieve your results by putting the resources you have in the best way possible.

Put simply, something is efficient if nothing is wasted and all processes are optimized. This includes the use of money, human capital, production equipment, and energy sources” (source).

Therefore, a profitable real estate niche is one where the real estate professional has the highest odds of achieving success with little to no waste, effort, or energy.

Five conditions would need to come together for that to happen:

• Existing but underserved segments or new ones that could be newly developed.
• Some competition is a sign that there is a market.
• Your ability to develop the real estate niche
• Room for growth
• A certain degree of barriers to entry

Doing good research is essential in developing a real estate niche.

This research is vital because, again, you want to discover already existing segments, underserved ones, or new ones that could be newly developed.

Finding a real estate niche that has no competition could be a trap.

Why?

There are two possible scenarios. If there is no competition at all, it isn’t really profitable. 

Or, for a second scenario, other businesses couldn’t make it profitable, but you can. In the latter case, you have struck gold.

Of course, chances for the latter case always exist, but this scenario shouldn’t be overestimated.

There are usually higher chances that other businesses couldn’t make it profitable.

But this doesn’t necessarily mean that you can’t.

Maybe you have a certain edge in or the ability for the particular real estate niche to enable you to do what most other real estate businesses couldn’t do. You can make the respective real estate niche profitable, even though the chances are somewhat against you.

The ideal condition would be to find and develop a real estate niche with room for growth, accessible customers, and less dominant competition.

You can approach a potential real estate niche from different angles, such as:

• Interests and hobbies
• Geography
• Values
• Income
• Price
• Quality

 

What are the Upsides and Downsides of Focusing on a Real Estate Niche?

Focusing on a niche market has several upsides: 

• You will deal with fewer competitors.
• You can better focus your business efforts.
• The chances of customers being loyal to your business are higher.
• It is a bit easier to provide expertise for a particular market niche.

Offering more real estate niche products and services will enable you to have less competition. 

Still, there is always the risk of over-focusing on a particular niche and thus not having a large enough market to target.

There is also a lower risk when it comes to competing with price and getting into a draining “price war.” (usually less common between realtors than for smaller retail products)

And finally, you can better target the specific needs of your target customers.

For example, you might be more competitive as a realtor when focusing on second homes in geographic areas attracting vacationers.

But suppose you only focus on second homes with great views.

In that case, you will be able to make yourself unique, differentiate yourself from your competition, and cater to the specific needs of a potential home buyer in this vacation spot.

This will also allow you to become a specialist in the respective real estate niche with its related products and services.

Once you are a leader in this niche, you can expand your products and services into broader markets.

What Are the Downsides of Focusing on Real Estate Niches in General?

There are, of course, also some downsides when it comes to real estate niches.

One I already mentioned above is to narrow down too much to the extent that you won’t target a large enough audience.

Another downside is becoming too dependent on a product or service. 

This situation can increase the risk of becoming vulnerable to market changes.

The next downside is that once you succeed, the number of competitors may increase, and competitors, in general, can quickly move in.

So it is crucial to ensure you develop a real estate niche with a certain degree of barriers to entry.

Without enough barriers to entry, larger companies with enough capital can start competing more easily with you.

 

The 73 Types of Real Estate Niches

There are plenty of different real estate niches you can take advantage of. The extensive list below will give you an overview of 73 niches.

And as always, your marketing strategy or plan will highly depend on the real estate niche you will target.

Each niche has different potential target customers with different needs and communication approaches and can be reached best by one or several other marketing channels.

The real estate niche you want to approach also depends on the type of real estate professional you are.

Some niches are more appealing to investors, and others are more appealing to realtors and other real estate professionals.

So, first, an overview:

The short paragraphs below will explain what these different real estate niches are.

For that, I picked a small selection from each category.

By the way, the above table is not just a table; it’s a matrix you can use to brainstorm and find different real estate niches.

How to do it?

You do that by combining different ones.

You can get quite creative in creating new sub-niches by combining these real estate niches vertically and horizontally.

For example, you could create a real estate niche of tiny houses close to golf courses for single military members.

The more you combine, the narrower the real estate niche gets, as does the risk of getting too thin and ending up with a potential target audience that’s too small.

Real Estate Niche By Property Type

1) Commercial Real Estate – Retail

If you are looking for the most diverse section of the commercial real estate market, it’s the retail sector.

These properties include shopping centers, individual stores, ‘big box’ stores, and pop-up shops.

 

2) Commercial Real Estate – Office

This commercial real estate sector includes all kinds of office spaces found in smaller or larger buildings.

There are two types: urban and suburban.

Urban areas can be found in cities, skyscrapers, and other high-rise properties.

The smaller ones are often grouped in office parks and belong to suburban office spaces.

3) Condos & Townhomes

An apartment owned by one individual within a building of other condominiums can be called “condos” or “condominiums.”

As a condo owner, you usually contribute to maintenance and amenity services via HOA (homeowner association) fees.

Townhomes are similar to single-family homes.

They are multi-story homes and are part of a multi-unit complex.

Its walls usually border adjacent units. The occupants are primarily tenants, but you can purchase them too.

 

4) Green Homes

When someone calls a home a green home, it usually means it was built sustainably with environmentally friendly materials.

Additionally, they are also built to focus on the efficient use of water and energy.

Different green building standards can be used as guidelines, but also to better market a green home afterward, such as:

• International Code Council’s 2012 International Green Construction Code (IgCC)
• ANSI/ASHRAE/USGBC/IES Standard 189.1-2011
• ICC 700-2012: 2012 National Green Building Standard (ICC 700)
• Green Globes™
• US Green Building Council’s Leadership in Energy and Environmental Design (LEED®)
• The International Living Future Institute’s Living Building Challenge™, version 2.1 (May 2012)

Real Estate Niche Based on Contract

1) Mineral, Air, and Other Property Rights

Mineral rights and air rights always concern a particular type of land.

The first relates to underground resources, such as oil, silver, or natural gas.

At least in the U.S., mineral rights allow the owner to exploit any natural resources beneath the land.

Different online auction providers and brokers exist, such as EnergyNet and Oil & Gas Asset House.

Air rights are the property interest in the “space” above the earth’s surface.

When owning such rights, you will have the right to use and develop the space above the land without interference from others.

2) REITs (Real Estate Investment Trusts)

REITs, also known as real estate investment trusts, are inspired by mutual funds.

It’s an incorporated company that owns, operates, or finances income properties.

To legally operate as a REIT, you need a taxable entity for federal purposes, such as a corporation.

Directors or trustees must also govern it, and shares must be transferable.

Another requirement is that it must have at least 100 shareholders. Not five or fewer than five individuals can own more than 50% of the value of the REIT’s stock.

This isn’t allowed for the last half of its taxable year.

A REIT makes it possible for individual investors to earn dividends from real estate investments without going through all the tasks that a direct real estate investor would have to deal with. 

These tasks are usually finding a deal, buying, managing, maintaining, tenants, and financing.

This is possible because REITs can pool the capital of numerous investors.

3) Crowdfunding Loans

Crowdfunding loans are part of something called peer-to-peer lending.

If you want a loan like that, you do the same as applying to a bank.

The difference is that the money doesn’t come from a bank, creating fiat money from thin air, but from already existing funds contributed by multiple investors.

This can be an exciting alternative for individuals and businesses that didn’t raise funds by using the traditional banking route.

Real Estate Niche By Demographic/ Life Situation

1) 55+/ Baby Boomers

I’ve already discussed this in-depth in this article about how to market to baby boomers.

You can also exclusively focus on this niche and cater to the needs of Baby Boomers.

Real Estate trends for baby boomers are, for example:

• Renting in Urban Areas
• Communities of Like-Minded People
• Rural Living

 

2) Hispanics

Since Hispanics will allegedly comprise 56% of all new home buyers in the U.S. by 2030, this is another demographic you may want to consider as a real estate market niche (source).

Here are some areas where Hispanic homeownership is growing:

• District of Columbia
• Wake County, North Carolina
• Washoe County, Nevada
• Pasco County, Florida
• Gwinnett County, Georgia

3) Single (Women)

There is an interesting sub-niche within the Millennial homebuyer generation and other generations, such as Gen X and Baby Boomers.

It’s singles and, particularly, single women.

A slightly older statistic, as of 2015, only 9% of purchases accounted for single men compared to 15% of single women.

This contrast is most substantial in the age groups of 51 to 60 and 61 to 69.

The main reasons for this developing trend are the loss of a spouse and the need to downsize afterward.

There is also a potential niche combination between the single women’s niche and tiny houses. Just an idea.

Real Estate Niche By Geography

1) Overseas Retirement Properties

This type of niche is kind of self-explanatory.

It’s all about properties that suit retirees that wish to retire overseas.

The reasons for this decision can be manifold.

Very often, because of climate reasons, they can become winter birds and live in a better climate during the colder month of the north.

Other reasons are the lower costs of living in places outside the U.S.

2) Walkable Neighborhoods

Walkability is part of a real estate niche within the larger niche of wellness real estate, which focuses on health.

It measures how friendly a specific neighborhood or area is to walking.

The following are factors that influence the walkability of neighborhoods:

• Presence or absence of footpaths
• Quality of footpaths or sidewalks
• Traffic and road conditions
• Building accessibility
• Safety
• Land use patterns
• Residential density
• Frequency and variety of buildings
• Presence of trees and vegetation
• Entrances and other sensations along street frontages
• A high number of places to go to near the majority of homes
• Street designs that work for people, not just cars

 

Real Estate Niche By Need

1) Vacation Rentals

Vacation rentals don’t need much of an introduction.
These are mainly properties in tourist hotspots.

This can be a mountain cottage close to a ski resort or a beach house with great views, and lovely ocean breezes from the sea.

These properties can be interesting to focus on as a realtor to attract investors and/or as an investor to generate income from vacation rentals.

Depending on the tourist hotspot, you will have to deal with different target customers and communicate with them via the proper marketing channels.

 

2) Supported Living

Individuals with disabilities and their families most need supported living properties.

These properties are usually connected with some sort of residential service to help the individuals or inhabitants attain or retain their independence.

 

3) Turnkey Rentals

From the investor’s perspective, turnkey rentals are basically already income-generating properties, where the whole part of finding, negotiating, closing, on a case-by-case basis, fixing, and putting a tenant in is already done for you.

It is almost like a real estate investment trust.

The difference is that you will need more capital because you buy the whole property and not just a share of a pool of several already rented-out properties.

Usually, the company offering turnkey rental properties also has property management in place.

The company also screens the tenant already in place, generating investor income before the close takes place.

Real Estate Niche By Seller Situation

Generally speaking, the niches that result from different seller situations are usually more troublesome and from situations where sellers have a harder time.

This is the underlying condition in almost all cases.

 

1) Fixer-Uppers & Properties with Structural Issues

These are run-down properties.

There are numerous reasons for that (often financial or legal ones). Sellers couldn’t or didn’t want to invest more money into their properties for renovations.

These fixer-uppers are also properties with structural issues that might be more challenging to fix.

The fixer-upper investor usually buys such property cheaply, fixes it, and then re-sells it, ideally at a profit.

 

2) Tax Delinquencies

Some sellers can’t or, for some other reason, couldn’t pay property taxes and become delinquent.

This is often an opportunity for real estate investors to negotiate a good deal with the seller to buy the property, provided he cancels the tax liability by making the purchase.

 

The 6 Most Profitable Real Estate Niches

Now you have a broad overview of real estate niches and know the critical elements of a profitable one. Still, you might keep wondering which ones are the most profitable.

This is a question that I can only answer partially, with a certain degree of certainty.

Why?

Because I don’t know your individual abilities to develop the particular real estate niche and/ or if you can overcome barriers to easy entry that potential competitors couldn’t. 

This leaves us with underserved or new real estate market segments, competition, and room for growth as the remaining three key elements I can analyze by researching data. 

What research metrics can we use for these three?

You can use GoogleAds Keyword Planner to check the high bids placed on the main keyword for a real estate niche. 

If so, then there are market participants that serve the market. If not, it’s underserved. 

This also goes hand in hand with the existing competition.

A very high cost per click can also indicate high competition.

Room for growth can also be determined when looking at Google Trends and how the overall real estate niche has been trending over the last few years. 

We can assume a reasonable likelihood for growth for at least a sideward and, even better, an upwards trend.

Therefore, I only included the existing real estate niches with some data on Google Adwords and Google Trends in the following tables.

To better quantify it and calculate which could be the most profitable, I allocated 10 points to the real estate niches with an upwards trend, 5 points for a sideward trend, and 0 points for a downward trend over the last five years. 

I multiplied the cost per click as a nominal number from Google Ads with the points I allocated for Google Trends to get the total points for each.

What does the $0 cost per click mean in some rows?

It means that the main keyword for this real estate niche was either too small in search volume for a market participant to bid on or had no data to show.

I sometimes had to change the main keyword a bit for the keywords I used to get the search intent right for market participants.

For instance, using the real estate niche “lakefront” as a keyword can mean many things to the searcher. To get the search intent more in a real estate market context, I had to change it to “lakefront properties.” 

What were the results of my analysis?

As most profitable real estate niches according to my analysis of all the existing real estate niches, “workforce housing” is potentially the most profitable real estate niche with a total score of 406.80, followed by the following real estate niches: 

• Healthy homes: 110.35
• Private lenders: 89.70
• Military/ real estate for military: 71
• FSBOs: 62.65
• Metropolitan areas/ metropolitan real estate: 39.80

I will end this article by leaving you with all the tables I created for the different real estate niche categories and their corresponding scores.

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