Last Updated on: 11th January 2023, 09:28 am
So, you’re looking for a property to buy, right? Whether it’s for personal reasons or for business, knowing what you will be getting your hands into is going to help you make better decisions.
To help you easily understand the topic, we only listed the three main types of properties based on what we think is the best choice for anyone looking to enter real estate property investing.
Main Types of Real Estate Property:
1. Single-Family Homes
Single-family homes are regular homes perfect for one family to live in. Although many home investors may see single-family homes to be harder to scale as an investment, on the good side, single-family homes actually get you a better ROI. It’s also much less of a headache to manage and it’s a more stable investment.
Let’s get to why that is the case…
The reality is, for many property investors, the goal of being financially free doesn’t actually mean acquiring property more than what they can manage. For many of them, a six to seven property under a $900 passive income coming in every month would be enough to say that they’re financially free.
How is a single-family home much less of a headache to manage?
Let’s compare it to an apartment complex. The fact is that tenants in an apartment complex are actually more demanding than those tenants in single-family homes. They expect 24/7 onsite staffing to fix any problems that arise, but in a single-family home, tenants are less likely to be demanding and can wait for a property management company to take care of the problems.
Many apartment complex owners can relate to this situation. So much so that a tenant will actually call you at two in the morning wanting you to come down to their place and have something fixed.
Why is a single-family home a much more stable investment?
For one main reason: tenants in a single-family home actually stay longer than others. On average, tenant in single-family homes stays for 3-5 years as opposed to an apartment that has an average rate of 20% vacancy where tenants literally come and go.
In addition, tenants coming in and going will just make your maintenance budget to be more costly having to repaint, redo the carpet, make updates, fixes, and more. Imagine doing that year after year. Wouldn’t it be wiser to just get a single-family home where tenants stay longer?
A duplex is a home with two separate units. Each unit has its own kitchen, bathroom, and living spaces. It may have two doors or one.
One main thing to note when looking for a Duplex house is to try to find one in a good neighborhood. This will make it easier to find a tenant. And when looking for tenants, try to find the best tenants you can. A good tenant will either make or break your property investment experience. So, if necessary, try to make a background check to really make sure that you pick the best tenant possible.
Why are Duplexes a good investment to start with?
That is because buying a duplex house doesn’t require you to pay a high downpayment. If you’re willing to live on one side of the duplex, you may only have to pay as low as 3.5% down to buy it, and then you can rent out the other side to someone else which oftentimes covers the rent that you have to pay yourself, allowing you to live rent free.
However, if you decide not to live on one side of the duplex and just want both sides to be rented out, the downside will be that you’d need to put 25% down on the duplex, which is a much bigger investment rather than 3.5%.
One-door home but has multiple homes in it. But is it a good buy and a good investment?
The followings are the pros and cons of having a condo as a rental investment property:
- There are limited problems in having a condo as a property compared to a house. Generally speaking, when something goes wrong in a condo, it usually costs the owner a lot less money to fix things than if they were to go wrong in a house.
- Cheaper to purchase. Because condos are usually smaller than a house, it’s obvious that it’s gonna cost you less.
- Cheaper to rent compared to houses that are around the same area you’re in.
- Great location at a reasonable price.
- Maintenance is easier. Condo buildings usually have maintenance on staff you can just call in an event that you have something in your condo that require fixing.
- Association fees. The more amenities you have in your condo, the more you have to pay every month.
- Rental restrictions. While there are cases where you can have your condo rented out to other people to bring in that extra passive income cash, a lot of associations actually restricts this. Why do they do that? Because they’re looking out for the best interest of other people that also own a unit in the building.
Although most of the details above are pointed directly toward home buyers and investors and not at sellers, no worries, we’ve saved the best for the last.
There’s one important thing to know that a home seller should know when selling a house, and that is: you can either do all the work and processes of the sale yourself or you can get an agent to do it for you.
You should know though, that real estate agent fees will cost you 6% of the total price value of the home you’re selling.
If that’s the case…
Do you really need a real estate agent to sell your properties?
It’s absolutely not necessary to get one but if you want to get your home to sell fast, then getting an agent might just be your best option. Besides, having a real estate agent good real estate agent will help you price your price appropriately to get the most money out of it.