Should I invest in rental properties? House, duplex, or apartment?

There are plenty of real estate investment opportunities in the greater Omaha area. As Will Rogers said: “Buy land, they ain’t making any more of it.” Income producing property can be a path to security, tax savings, and wealth building. It can also be a source of sleepless nights, a drain on cash reserves, and an opportunity to learn all kinds of things you didn’t want to know about.

There are 4 basic choices of direct real estate investment: 1) bare ground 2) multi family dwellings 3) commercial property and 4) single family houses. After having some experience with all 4 types of investment, I have found that the typical buyer is most comfortable with the single family rental house as an investment. Let’s look at what’s involved when you invest in a rental house.

Any rental investment needs to be treated as a small business for its owner. There is an inventory to keep up, a storefront to maintain (curb appeal), marketing, bookkeeping, and customer relations. It can sound complicated, or you can refer to what you already know about real estate.

A long term look at the investment includes selling the asset. The single family dwelling can be used by anyone, the “target market” of buyers is unlimited. A duplex, fourplex, or apartment complex is not a purchase that everyone contemplates, thus the market is restricted. Any real estate is an illiquid asset, it cannot be moved, and sometimes is difficult to finance. There are systems available for purchase of single homes, our government is continually finding ways to help individuals purchase their own homes. Commercial and multifamily properties commonly require a 25% to 40% down payment, a “barrier to entry” is the large amount of cash required to get started.