When it comes to real estate investing, there are a variety of different property types to choose from. So which one is right for you?
Often, successful investors have a mix of different residential property types in their real estate portfolios—but it's important to understand how different properties could impact returns or your long-term goals.
What types of investment properties should you consider to build long-term success? Our experts talk through a few critical things to keep in mind when developing your real estate investing strategies.
Should You Consider Single-Family Homes?
When thinking about how to create wealth investing in real estate, most people probably think of single-family residential homes. Single-family homes are an excellent option for fix-and-flip or rental properties. They offer stability and consistency, and they can be a good investment for long-term growth.
Many investors that operate rental properties prefer single-family homes because they're easier to maintain than multifamily properties. It can also be easier to find tenants for stand-alone homes vs. keeping multiple apartments filled with good tenants in markets where there's tough competition for rentals.
For house flippers, single-family properties often bring the best returns if you're able to buy at a low or reasonable price, stick to your rehab budget, then sell at a higher price to generate a profit. Compared to rehabbing a duplex or multifamily residential properties, single-family homes are simpler to buy, renovate, and resell to keep cash flowing.
What About Multi-Family Properties?
Multi-family properties, including duplexes, condo buildings, and apartments, can provide investors with more cash flow and appreciation opportunities. However, they also come with more risk and responsibility.
If you operate a multi-family property as a rental, it can be challenging to find enough renters to keep every unit occupied throughout the year. Empty units lead to income loss, so a real estate investor must take a proactive approach to keep apartments or duplexes in excellent condition and market them like a pro when dealing with vacancies.
If you prefer fix-and-flip investments, an apartment complex can be challenging to buy, rehab, and sell at a profit. While some real estate investors have good success flipping duplexes or condo units, multi-family properties might not be the best type of investment property for long-term success.
How to Evaluate Potential Properties
Many successful investors have a mix of property types supporting their real estate portfolios. Diversifying with some single-family homes and multifamily properties can help you build a stable long-term investing strategy to generate more wealth.
However, before buying a new property, it's essential to analyze it and make sure it can generate the returns you need. Property investors must evaluate the potential return on real estate investments (ROI), whether taking on a new buy-and-hold property or choosing their next house flipping project.
Calculating ROI is more than looking for profit. It's a measurement of potential income vs. the costs of operating a rental property or flipping a house. If you're not how to find potential costs and income for rental properties or fix-and-flip properties in a specific market, work with a real estate agent or property manager in the markets where you choose to invest.
Start With the Best Properties
Whether you're a seasoned investor or a beginner real estate investor, it’s important to do your research before investing in multi-family or single-family properties! One way to ensure you start with the best properties with excellent potential for the returns you need is to use Privy's platform! We scour the MLS in markets throughout the country to find properties that meet your criteria, then send these deals directly to your inbox.
With our software doing the hard work to narrow down your search, you spend less time finding properties and more time running the numbers and generating the profits you need to build long-term success.
In addition to the best properties at the best prices, Privy gives you insights into what other real estate industry investors are doing in different markets. With insights into the best real estate investing strategies, working with Privy is like having access to real estate investing 101 tips every day! Our mission is to help property investors close more deals using technology and resources to eliminate the need for expensive guru education. Instead, we want to help you reach your goals as quickly as possible.
Do Your Research With Privy Before Buying Your Next Real Estate Investment Property
Ultimately, the type of property you invest in should support your long-term goals and investing style. Building a real estate investment portfolio with profitable properties requires the right research and insights, no matter the real estate market you prefer—and that's where Privy can help!
While real estate can be a long-term strategy to meet your goals, it doesn't have to take forever to get there. With the Privy Advantage, investors have access to the strategies that top investors use to find properties, make deals, and grow a profitable portfolio. If you're ready to learn more about how Privy can help, reach out to our team!
Learn more expert real estate investing strategies in our free resource, “How to Invest In Real Estate: A Guide!”