Investment in rental property can be a risky proposition if the investor has not done his/her homework. But for the investor who has taken the time to research, it can be very lucrative. Probably the one thing most investors want to know more than any thing else is how they can become wealthy in the shortest period of time investing in rental property.
Most investors are busy concentrating on flipping single-family houses, when they should be concentrating on investing in multi-family units. With a single-family house if you lose the renter you have lost 100% of your income, which could be your profit for an entire year. If you have a four-family apartment and lose a renter, you have three other families giving you checks to pay your expenses. The bottom line is cash flow and cash flow is greater with multi-family units than with single-family units.
Let’s talk economics. If you have invested in several single-family rental properties you will more than likely have to travel to several different locations to collect payments, or to check on the property. With one multi-family unit you save time, gas and wear and tear on your auto by only having to travel to one location to collect several payments, or to check on your property. With today’s economy it could cost from $2000-$7500 depending on where in the country it is situated and the size of the house. Multiply that by six and you’re talking a very large amount of money. Repairing a six-family roof would cost between $5000-$10,000. You do the math.
There are a lot of real estate guru’s with infomercials abdicating the money to be made from flipping houses. They make it seem easy. But have you ever watched some of those programs on TV? Watch ‘Flip that House’ sometime. You will soon see it can be very costly rehabbing a house, especially if you don’t check the house exceptionally well before buying. Not only costly, but very time consuming. Not to mention the different contractors you have to deal with. That’s another problem; taking the time to interview and research all those contractors. After all, you want someone who knows what they are doing, don’t you? Once you find a good contractor and he has done work for you, don’t think they will always be ready to jump when you call them. After all, they are business men and they can’t sit around waiting on your calls. They have other irons in the fire like all good business people.
Don’t get me wrong, investment in rental property is a good business. Single-family houses are good investments. But they can also be a means to investing in apartments. If you know of anyone who is making money flipping houses, odds are good that he or she also has some apartments in their portfolio. Flipping houses is fine for the person who wants to do it, but investment in rental property is the better investment. And there is a huge market for apartment investing. After all, the guru’s are teaching everyone to invest in single-family houses. Investment in rental property is a sound business. Good luck.