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Property management Guide
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Five Types Of Residential Rental Properties
Apartment rental properties, residential property management, real estate
apartments
There are five types or residential
rental properties. They are categorized on the basis of investment.
They have their own advantages and disadvantages.
Single family Rental properties include individual houses. They
provide the easiest way to get into real estate investing because of the
financing options and possibility of a low down payment. Other reason is
they can build equity fast during times of rising prices even if rents are
not rising. They can be sold to other investors or home owners easily so
the sale becomes easier. The disadvantage of this is if it very difficult
to find houses that can produce cash flow after all the expenditures are
considered. Since it is a single unit if you lose your tenant you loose
100% of your income until it is rented again. If you own more than one house
to compensate for this it will give other problems like maintenance, collecting
rent compared to an apartment building with same number of units.
The main advantage of apartment buildings is that the prices
are based on income, since only investors buy them. The price of the apartment
building is based on the rents so if you buy one with low rent you can increase
the value of the building by raising the rent. The disadvantage is difficulty
in financing them and the larger down payment normally needed.
The duplexes, triplexes and four-plexes can be financed
like a home. It is a bit difficult to make this type of rental to produce
cash flow. There are many people out there buying them to live in one unit
and get the equity gains from the whole property. Most of them push the
prices too high. Of you can come close to breaking even the eventual gain
from equity build up may be worth it.
Low income housing like the mobile homes and small homes
are in need of repairs and collecting rents will be a problems. Investing
on such properties involves more hassles and more time invested. For the
amount of money invested the income will be more but still it involves repair
charges frequently although it is cheaper as in insurance and property tax.
Although collecting money is a hassle it involves lot of cash flow. If you
possess many such properties you can appoint a manger to collect the money
from the different tenants.
The other category of residential rental property includes the less common
residential rentals. People invest on these since it involves
more cash flow compared to the other ones. A large house can be rented as
a boarding house with rooms rented out individually. This is more popular
and profitable in a college town.
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