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Which type of rental property is the best rental?
This is a question that we’re often asked as property managers and investors ourselves, but it’s not just an easy answer. I wish I could just tell you this is the best. And of course, I’ll give you my opinion on that and some of my thoughts, but it’s something that needs further exploration, further discovery for you to make sure that the type of investment that you’re investing in lines up with some of your investing goals and what you’re looking for. And of course, if you’re managing it yourself, or you have a property management company that’s managing it for you, will differ a little bit.
Now, what does best even mean? Are we talking about best cash flow? Are we talking about best appreciation over time? Are we talking about easiest to manage and the best type of rental that attracts the best type of tenants? There’s different questions that we can ask and we can further explore.
Now, there are single-family homes, condos, town homes, small multi-family, which is duplex, triplex, four-plex, and of course, larger multi-family, five-plex and on up to apartment complexes even. And they have different pros and cons. Now, I’ll share with you what we prefer. A lot of it’s gonna be market directed, so if you are investing in an area that’s primarily multi-family, and that’s what you have to choose for, well, then that’s gonna be a good option for you. If you’re gonna be in an area that’s primarily single-family homes, then you may wanna look there because a lot of the times, the type of tenant you’re looking for will want to live in that type of property, whether that’s in a big city. They’re looking for apartments. They’re looking for multi-family. If it’s in a more suburban area, then they’re probably looking for single-family town homes, sometimes even condos. It’s gonna vary based on geographic location.
Now, here’s our favorite. We love the single-family home. Three to four bedroom, two bath, one to two car garage, and in an area where the ideal tenant wants to live. Why do we like this? Well, they rent quick. When we get them in the right area, the right location where there’s a lot of movement, and you can find out pretty easily what areas those are just by calling property management company, realtor, someone who’s in the industry, and saying, “Hey. Where are the most home sales? Where is there a lot of movement, people wanting to live, a lot of demand?” And they’ll tell you some of those areas.
Now, those properties may be a little tougher to acquire, but they’re gonna be worth it if you can be patient. It doesn’t mean you’re paying a lot of money for the investment, just means you’re in that kind of entry-level home, suburban area, where a lot of people are wanting to stay, and they wanna get some roots. That’s a good part here. One of the strategies here is they wanna have some roots, so they wanna stay for usually two, three, four, five plus years. And that’s a big part of our decision here, is we wanna reduce vacancy. We wanna increase the accountability on the tenant, the things that they’re responsible for taking care of, which reduces our operational cost.
So, that’s kind of our golden ticket, what we like. It’s also the easiest to manage for many different reasons. Hope this is helpful. If you have any questions of course, we can explore different types of properties, or we can help you find these ones, as well.