Pros and Cons of Various Types of Rental Properties for the Real Estate Investor

Many real estate investors own rental properties at one time or another. Many times, it is a conscious decision to go out and buy real estate with the purpose of renting it out. If this is what you have in mind, consider all the different types of rental properties before you make that purchase.

Single Family Detached Homes

Pro: It is usually easiest to obtain financing for an individual house, especially if you are a new investor. This makes it easier for you to start small and increase your real estate holdings a little at a time.

Pro: Each home is individual. Since there are no shared walls, the possibility of one tenantโ€™s noise and activities disrupting the other tenant is minimal.

Pro: There is usually less cost in fixing up a single family dwelling to rent than a multi-family dwelling.

Con: The difference in mortgage payment compared to a multi-family unit is relatively small, but the profits will usually be lower.

Con: It would be harder to manage several single units that are spread out than it would be to manage a single building in one location. In fact, you might even need more than one building manager, depending on how far apart the houses are.

Duplexes

Pro: The cost for a duplex is about the same as the cost for a house of the same quality and size, but you can get roughly twice the rent.

Pro: The chances of having both sides empty at the same time are slim, so that you have fewer worries about security. You will also have fewer problems with cold-weather related plumbing incidents.

Con: Finding two people that are compatible to occupy the two sides of the duplex may be difficult. Since they are the only two people or families living in the building, it is best if they get along.

Con: Parking can be difficult because there are usually more cars for the number of people in a duplex as opposed to a single family home. Yet it is not big enough to have a parking lot.

Apartments

Pro: The more units, the less likely they will all be vacant at once. Even more than with duplexes, this contributes to greater security and helps with plumbing concerns.

Pro: You can provide more security features, including a locked entrance and security cameras. This will benefit the tenants, but it also helps you keep your property safe.

Con: A problem with one unit can create problems for all units. For instance, a plumbing problem in one unit may cause plumbing problems throughout the building.

Con: Pest control can be difficult. When one apartment is treated, the bugs may flee to another apartment. Then, when that apartment is treated, they move on to another or back to the first. It is hard to get rid of pests once they appear.

Choosing rental properties to invest in can be difficult, but it can also be exciting. Learn all you can about the rental properties you want to invest in, and think about whether they offer the best advantages. Then, you can start looking at properties seriously and making profitable deals.

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