LET'S TALK ABOUT THE ADVANTAGES OF EACH INVESTMENT PRODUCT!

How do single family homes compare as investments?

• Single Family Residences (SFR) are easy to understand, liquidate or get cash out from a refinancing. This could provide an investor a good cash flow, the rent should be close to 1% per month of the total investment amount, are best if they are not built earlier than the 1980’s due to those built earlier have lead-based paint. You want to look for bread and butter type homes in an area with high employment growth and a broad-based economy, not an area where there may be only one traffic light in town.

How do duplexes, triplexes, fourplexes, compare as investments?

• Duplexes, triplexes, and fourplexes can give slightly higher cash flow (if everything else is equal), however, you are putting more “eggs in one address.” They are less liquid and tend to appreciate less than an SFH. Like all investments, it is critical that you buy from a reputable experienced source and that you get excellent property management. If you plan on being an investor and not just a landlord, then a good property management firm is necessary and well worth your time and money.

How do multifamily Apartment buildings – 5 or more units compare as investments?

• Multifamily (Apartment buildings - 5 or more units) is considered a commercial property, giving you as an investor the opportunity to write the properties off per expenses more easily. This is where an investor can create instant wealth with forced appreciation and equity. An investor will want to determine how many doors it will take to provide a full-time income from an investment. It can be harder to qualify for a loan, but astute lenders really look at the deal and if it is feasible and whether you as an investor have the ability and track record to increase the value and profitability of the property in question. However, if you do attain the loan, good for you, but understand if dealing with Fannie/Freddie loan restrictions, you must meet their criteria when investing in real estate like multifamily. Also, to reduce and spread your risks we recommend that you invest with a first-rate, reputable, and very experienced syndicator.

How do commercial properties compare as investments?

• Commercial properties on the average have higher returns and higher risks, which require higher funds outlay. Their advantages are that you have higher quality tenants, longer tenants, and more predictable income. Also, most are NNN (triple net) which means that the taxes, insurance, and maintenance costs are passed on to the tenants. Again, like with multifamily properties, to reduce and spread your risks it is recommended that you invest with an excellent, reputable, and very experienced syndicator. In addition, there are four different levels and types of net leases: Single (N), Double (NN) and of course Triple (NNN).

  Note: 

  Ø  Single net lease (N): In a single net lease, the tenant agrees to pay property taxes. The landlord pays for all other expenses in the operation.

  Ø  Double net lease (NN): In a double net lease, the tenant agrees to pay property taxes and insurance. The landlord pays for all other expenses in the operation.

  Ø  Triple net lease (NNN): This type of lease is most favorable for landlords and is one of the most popular today. Banks, fast-food restaurants, and anchor tenants typically use triple net leases.

  Ø  An investor does not normally have direct management of their properties, they contract with a property management company and manage them.

  Ø  A landlord usually does have direct management of a property, which limits their time vested in pursuing other properties to invest in to continue creating wealth.