How to Choose Between Single-family and Multi-family Homes

Entering into the real estate market requires time and monetary commitment. Depending on the purpose for purchasing rental property and how much capital you have can determine whether you should invest in single family or multi-family housing. In either case, you should prepare short or long-term goals, be cognizant of your risk tolerance, and conduct a comparative market analysis before buying an investment property.

Short Term Versus Long Term Investments

The best way to buy investment property is with leverage. For investment purposes, a multi-family requires more up-front capital to start the investment and provides more potential to increase the value of the property. Single family on the other hand requires less capital up-front and can make high cash on cash returns in the short term. To evaluate properties using software see this blog article. 

If your purpose is to claim the new location as a future domicile, then investing in a single-family provides you with the opportunity to relocate at some point. Be aware however, that rentals are not eligible for homestead exemptions. With the exception of Delaware, Pennsylvania, New Jersey, and Rhode Island, all states offer some type of homestead exemption for primary residences. As a result, if changing your home location is part of the long-term goal, then considering the purchase of a single family for a temporary rental, until you are ready to relocate.

After you have learned how to invest in single family houses, you may want to learn how to invest in multi family housing. The economies of scale are much better, there’s lower competition, and you have more control of the cash flow for optimizing the properties potential. The biggest barrier to entry is the upfront money you will need to invest, qualifying for the loan, and finding the right property. 

Find out why I choose residential over commercial properties.

Investment Considerations

Before buying an investment property, make sure to research on the internet about investing in rental property for beginners. There are many items to put on your checklist, be prepared for the make ready and for the possibility to go over budget. Plumbing and sewage lines must be in working conditions to avoid impending disasters. Adequate electrical service and outlets, in combination with internet access, attract financially secure tenants. You may require registered, licensed, and insured contractors to provide the necessary workmanship. Be prepared in the event of delays in the delivery of goods, inspections, and completed work orders. Always pad your budget a bit just in case so you are not stretched beyond your financial plan for the investment.

Always Investigate The Submarket

Any real estate investor must consider the submarket. One should look at the demographics of an area, the percentage of violent versus non-violent crimes committed in an area, and the future plans for development of any surrounding areas. Usually, the rating of the local high school will also provide insight into the stability of the surrounding communities. 

This article reviews software that real estate professionals use better understand the submarket before buying an investment property.

Consult A Reputable Agent Investor

It is important to recognize that most real estate agents are not investors. If you attend just one seminar that talks about investing in rental property for beginners, the chances are you will be looking at the property from a different perspective than most real estate agents. 

The best way to buy investment property is to consult a licensed and experienced real-estate agent that is also an investor and is very familiar with the submarket. The agent should provide information regarding long term versus short term available rentals. In addition, if there are deed restrictions, the agent should provide the prospective buyer with the necessary information.

For more information stay tuned into this blog site: https://realestatewaypro.com for up-to-date real estate information about single family investment properties and how to invest in multi family housing.