Single Family Homes
Conventional wisdom says that if you can afford a single family home, buy a single family home because they tend to decline less in a correction and rise more in a bull market. Single Family Homes usually provide better capital appreciation, more expansion potential, more tenant type flexibility, and potentially less tenant turnover. Downside includes more hands-on maintenance, and a lower rental income yield. For those who would like to live in the home, make improvements, and then rent out the home, a Single Family Home is the best investment property for most.
Condos are generally cheaper to acquire and may provide a higher rental income yield. Downside includes HOA fees and HOA regulations that may restrict rental freedom and reduce rental profits. You’re the king of your condo, but not king of the common domain. For those who cannot afford a single family home, or who like spending less time on maintenance should consider a condo.
Multi-unit properties provide maximum rental yield income and a high amount of tenant type flexibility. The main downside is potentially higher turnover rates and much more active management by the landlord. Also check for rent control laws. In San Francisco, multi-unit properties are under rent control, but SFHs and condos are not. For those who have more energy and more time, multi-unit properties may be the way to go.
Before you make any decisions on buying your first investment property, it’s a good idea to do your research on a good property management company, and meet with a local loan officer and realtor who can advise you in how to start your journey.
If you want to learn more, then feel free to schedule a consultation with me and I can walk you through the steps.