Residential investment properties come in many forms and can produce many different types of returns. From mostly capital gains to a combination of cash flow and future value growth can be a great asset to any investment portfolio. Understanding the types of residential investment properties and the pros and cons of ownership are essential to real estate investing strategy success.
Single Family Residential
Single family residential investment homes as an investment property are similar to annuities, current cash flow in the beginning is almost a break even. However, after many years of tenants investing in the property for you by making your mortgage payments, the home is eventually paid off. After this the cash flow really begins.
Just as in an annuity where there is a large capital outlay on the front end, the return in cash flow can be huge. As a hedge against inflation and a supplement to a retirement account, single family residential investment(s) often return huge dividends while providing for steady capital growth. A fairly safe investment when managed properly.
Often referred to as duplex or quadraplex, 2-4 unit dwellings can be great cash flow generators. Not typically known for capital gains, this residential investment is a hybrid investment. Risk factors are slightly lower than the vacancy costs associated with apartment building investments yet stability is similar to single family homes.
Multi-unit residential investment is often the first step towards more complex investments like apartment buildings and apartment complexes. The cost savings associated with having more than one unit under a single roof make multi-unit dwellings the perfect hybrid investment.
Apartment Buildings & Apartment Communities
Considered the pinnacle of residential investment, this investment can generate considerable current cash flow while providing other benefits. From traditional investment benefits like capital gains to more obscure benefits like depreciation, multifamily residential and apartment community investments are what any investor with more than 5 single family residential homes or multi-unit residential properties should consider moving to.
While investing in apartment buildings or small apartment communities is more complex, the benefits of having a large number of units under one roof is well worth the undertaking. When looking for additional streams of real income, stepping up to apartment building investments is the perfect choice.
All Residential Investment
From a single home to a 250 unit apartment building, investing in residential real estate inside or outside of a retirement account can be highly profitable. Investing using an IRA or a 1031 Exchange to generate velocity in your retirement income? It can be done with the proper guidance.
Our clients invest for retirement and to diversify income streams creating additional revenue to support themselves and their families. Some build a child’s college fund, others have income goals that their daily 9-5 won’t reach and there are those who know they should be invested but just don’t have the time.
Whatever the reason, EnTrust Realty professionals are here to help. We understand the world of real estate investing because we also invest!