RISK vs RETURN.
It is a balance based on where you are in your investing life cycle (maximize gains (higher risk),medium gains (medium risk with good returns),minimal gains (core assets that slightly outpace inflation).
You have to ask yourself if you are buying on an appreciation play or sound financials (cash flow)??
Many in Vegas,California and other areas are speculators.They take risks that can pay off big but also lose their shirt.They know and have assets to where if they make a mistake they will be okay.
I like multifamily because of the many ways you can increase the value of the property.
You can sell down the road for a higher amount and leverage into bigger properties.Economies of scale has you using a professional management company with systems in place then the more typical one of using agents for little houses that get mismanaged all the time.
Do not underestimate the time it will take to manage a property correctly.
The apartments usually come with a bunch of land that can be redeveloped down the road or additional units added.
With a house I am stuck to just the rent amount and the comps for the neighborhood for the area and any appreciation that happens.
I have seen in some areas where you buy an old house and then level it and sell it for profit to someone who puts a big mansion on it.
So I will look at houses on their own land but do not like subdivisions.
Example I buy a house that rents for 1,000 for 80,000 sales price.The property over 2 years time goes up 8% and is now worth 86,400.
Instead I take 80,000 and leverage into a 4 unit property.Property had bad tenants and the property needs work and currently 2 tenants there.
Buy for 80,000 cash and put another 20,000 in repairs.
Have 100,000 in and before was only getting 800 a month each for the 2 bed units.
You evict fix up and now have all 4 rented out at 1,000 a month each.
48,000 a year gross by 2 is 24,000.Reselling stabilized at a 10 cap you now have a value of 240,000 from 100,000 investment.It is the forced appreciation of value add deals that helps grow money quickly.Everyone will have a different take relative to their style of investing.
It’s kind of like when I became a real estate agent,then a broker owner of my own company.At first I didn’t know what I liked and did not like.Then after awhile I discovered I enjoyed Retail and Multifamily.
So as an investor you have to find your way.
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