Real estate is unlike other investment strategies like bonds or stocks. Congress has laws in place to reward investors who invest in real estate. Why? Well this country needs housing and government isn’t into housing (for the most part), so they encourage anyone who wants to provide housing by offering tax incentives. Additionally, real estate is not tied to the economy so there is less concern about the ups and downs of the economy cycle.
Multi-family investments are generally more profitable then single family. Take a small duplex compared to 2 single family. Often times I can get a duplex for less money per square foot then a SFH. You should also consider the costs of closing. A single duplex I have 1 realtor or wholesaler fee, 1 closing cost, title search, insurance policy etc. You can double that for buying 2 SFH.
If there is a downside, it’s much easier to sell a SFH then it is a duplex or apartment complex.
I’m not saying anything that you don’t already know. So, what is so great about multi-family? People need housing no matter what the market is doing. With multi-family, the more units you have means more money for you. You can always increase your returns by cutting costs, raising rents etc. You have more control over your real estate investment then you have in paper assets. In fact, you have no control over your paper assets.
Reports show that this year and in 2019, there are more people renting there in previous years. Part of the reason is the rise of property values. With higher values, people need to come up with a larger down payment if they want to purchase a home.
What About Commercial Properties?
Personally, I prefer most types of real estate over paper investments. But speaking specifically about commercial properties, they are tied more to the economy then residential properties. Simply because they relate to businesses and not just individual’s need for housing. When the economy dips, businesses feel that dip.
Unlike residential properties, commercial properties generally take a bit longer to lease. There are not as many businesses looking for a place like there are individuals looking for housing. You simply have a much bigger pool of potential renters. On the flip side, when you do find a good commercial tenant, the leases are generally longer, offering a little more longer-term stability. Businesses usually don’t want to change locations once they are established.
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