What Type Of Property Is The Best To Buy?
I often get the questions “What type of property should I buy?”. There seems to be a lot of options out there; a single family home, or a duplex on up to five units or more. So which one is the best?
Single Family Homes
The good thing about single family homes are that you would usually find more stable tenants that would stay for a longer period of time and they would also pay for most of the utilities. However, when trying to buy a house you have to compete with buyers that want to live in it.
2-4 Complexes
The pros are that you can use more creative financing when buying and the rent ratios are better than a single family house. The cons are that you typically need more for the down payment when getting conventional fnancing.
5+ Complexes
When buying bigger complexes, you can get much more rent ratios than anything else and is also easier to manage compared to having multiple smaller properties. However, the down payment is even more than smaller properties and harder to get financing, which also means it will be harder to sell.
As you know, we are currently in a time of high prices, but how long will it last? Just recently we have seen interest rates rising and properties taking a bit longer to sell. Looking at market indicators like these can tell you when and if you should sell your rental property.
Properties Sold In June
Management Tip of the Month
9 Secrets To Landlording Success
1: See Landlording as a business, not a hobby. Keep all matters strictly business level.
2: Know the law.
3: Set up a response system for handling services and repairs.
4:Never rent your property until it is rent ready.
5: Qualify your tenants based on what they can afford.
6: Always use up-to-date rental forms.
7: Repair vacant units as quickly as possible.
8: What you owe residents is total fairness, not friendship.
9: Always expand your vision to what you could be doing better and other ways to maximize your yield.
I give a lot of information about this process in my book: