Residential Real Estate Investing Guide
Residential Property Investment
Residential real estate investing is the best type of rental property to put your money into. If you are going to do residential property investment there are several options:
If you are a seasoned pro and have lots of cash available you might want to go into commercial properties. But, while businesses tenants might seem to be less of a problem than residential tenants, this can be a higher risk investment.
If the economy is slow and you lose a tenant it may take months or over a year to occupy the commercial property.
On the other hand, people always need a place to live. And at some price there will always be a steady demand for tenants in a residential property investment.
Single family homes are the best real estate investment.
Now you might be thinking that tenants can be a big head ache. You imagine that residential real estate investing will consume lots of your time and that tenants will destroy your property.
Yes, that can be true! I've had tenants call me at 2 AM to get bats out of their apartments and had to crawl under cobweb filled crawlspaces in 15 degree temperatures to un-thaw frozen pipes. I'd often spend my time making small repairs or begging for rent. And I've had tenants destroy some of my properties after not paying the rent for a couple of months. That is why I hate multi-unit residential real estate investing.
So, why am I still investing in rental property? Because I found one situation that works very well. The tenants take care of their property. The tenants take care of small repairs and pay their rent on time. There are two "secrets" about what works for me for residential property investment:
I have found that most people want to own their own homes. If tenants think that they are going to buy the home they are living in, they will take care of it.
So when I am shopping for tenants I accept only those who are willing to sign a lease and an option to purchase. I will cover this in more detail in the section titled "Rent to Own".
Most of the seasoned investors in my Real Estate Investment Club buy duplexes. Their reasoning makes some sense. For a given building they get more rent than for the same size single family home. If one tenant moves out they still have some income coming in from the other tenant. However, my experience is that:
Tenants that live in duplexes typically do not take care of the property as well as a home owner and are not as likely to pay their rent on time.
In better areas duplexes typically have an "owner" half and these properties tend to be overpriced. If you are interested in owning a house with strangers living in the other half, then it's a good deal for you. But I want my own house and most people are the same.
So how do you find out more about investing in rental property before you start investing? The best source of information will come from your local Real Estate Investment Club.
Where do you buy the types of properties I am talking about? Buying rental property in the right neighborhood is critical to your success. It requires lots of time and research and should not be overlooked. Don't miss this link! Buying real estate in the best location.
Link from Residential Real Estate Investing to Buying a House
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The materials contained on this website are provided for general information purposes only and do not constitute legal or other professional advice on any subject matter.
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