Explore the most common types of rental properties and their benefits for investors
When investing in residential real estate, there are three main types of properties to consider: multifamily properties, townhomes, and single family homes.
Each type of rental property has its own set of unique benefits for real estate investors, so it’s important to establish what you’re looking for before putting your money down.
Continue reading to understand the perks of each type of property and determine which one is the best investment for you.
Option #1: Single family homes
When it comes to beginning a property investment journey, single family homes are a great place to start. With only one tenant to worry about, you’re left with an easier property to manage overall.
You can also make leases as short or long term as you’d like depending on how much you want to vary your tenants.
Another benefit to a single family home is that they appreciate in value quicker than multifamily properties, so over time the value of your single family home will continue to steadily increase.
Option #2: Townhomes
Townhomes are a perfect medium when it comes to investing in rental properties. They aren’t stand-alone properties like single family homes, but they do include a vast amount of privacy and space. Unlike multifamily properties, townhomes are leased to one tenant and provide great privacy from neighbors
These rental properties also come at a more affordable rental price for tenants than single family homes, which results in producing strong cash flow for investors. Townhomes don’t require too much maintenance and offer additional benefits like the mortgage being paid down through the tenants.
Option #3: Multifamily properties
Apartment buildings with several units are multifamily properties that can be individually rented out to a number of families at a given time.
This type of rental property is the best for cash flow and financing because of the multiple inputs of income. For example, if a building has five apartments and one suddenly becomes vacant, 80% of the rental income is still accounted for.
Another great benefit of multifamily homes for investors is the scalability. There is much more room to grow here than if you acquire multiple single family homes over time.
Which type of rental property is best for you?
Not all rental properties are the same, and it’s important to understand what works best for you as an investor. No matter the type you choose, handling a rental property can become a lot for one investor. Consider partnering with a property management company to help guide you on your real estate investment journey.
Need a property management company to partner with?
Rental Heroes can support your real estate investment goals by providing you with high-quality property management services in Orlando.
Our local knowledge helps us to proudly manage hundreds of units across Central Florida, and we’re committed to doing everything we can to keep your tenants happy and your real estate investment running smoothly.
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