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The Ideal Properties for Real Estate Investment for The Busy Professional

As a busy professional, it is likely that your income will be sufficient to qualify for loans on investment properties – especially Single Family Homes – in most of the U.S. markets.  A high percentage of busy professionals also have good credit scores, which bodes well for getting good financing.

I maintain that the ideal property for real estate investment for the busy professional is the Single Family Home (SFH). SFHs are almost a perfect property for the individual investor who also has a regular job or business. SFHs are still the “American Dream” for most people. They are also a relatively attainable dream in many large metropolitan areas in the U.S. where prices are quite affordable, even in 2016.

SFHs are essentially the “liquid” real estate since when it is time to sell your potential buyer pool is the largest – effectively all home-buyers in the marketplace.  These homes are the real estate investment on which you can get the most powerful loan in the real estate universe – the magical fixed-rate, 30-year loan. 

Technically this loan is available on 1 to 4 residential units so duplexes, triplexes and four-plexes also qualify. However, SFHs are usually superior to the 2-4 unit properties. In good areas you will usually find only SFHs, while you may have to travel to another part of town to see the “plexes” and they will usually be surrounded by many other “plexes.”  The “plexes” are more likely to present management challenges, have more short-term tenants (statistically) and to top it off, may not necessarily provide as good an appreciation over the long term. 

One exception is new duplexes in white-collar areas, but overall the SFHs are superior. I have been buying homes for well over 30 years, and helped people buy nearly 10,000 homes in dozens of markets. During these decades, I have witnessed many “plexes” and their performance as well as many thousands of SFHs. My experience, and the experiences of thousands of investors, leads me to favor the SFHs over the “plexes.”

Buying larger residential properties – apartment complexes – can be a good investment, but there are areas where the investor needs to be an expert. The optimal apartment complex size, based on the experience of most apartment complex investors, is between 100 and 300 (many say 150-300) units, so economies of scale can be utilized to improve cash flow. 

For example, you may need one full time on-site manager and one full-time maintenance person for a 110-unit complex, but if you have a 60-unit complex, you may STILL need to use one full-time on site manager and one full time on site maintenance person – but with 50 less rents coming in! That is NOT using economies of scale very well.  There is a lot to discuss on the subject of large apartment complexes, but for the scope of this article, they require deep expertise to run properly.  
They may take up much more time than a busy professional has available; they are NOT financed with the magical 30-year fixed rate loans, and they usually call for a large investment upfront. For the busy professional, Single Family Homes present a simple, effective, and very powerful investment, with outstanding financing that cannot be found anywhere else and a time commitment, which is relatively low. 
We will discuss this topic, as well as many other crucial topics for investors, at our Quarterly 1-Day Expo on Saturday May 21st near SFO. We will have market teams present, including a new exciting market. We have also invited top-notch experts to speak on Property Management, 1031 Exchanges and Proper Insurance – the first and most important barrier in protecting your assets, including nationwide umbrellas. Everyone mentioning this blog is invited to attend free, with associates. Just email us at info@icgre.com to register, and in the subject line write: Saw your blog! See you there.

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