Different Types of Residential Rental Units

There are several distinct types of properties that a landlord can invest in as a rental property. Some of these properties may offer better rental potential while others may offer higher returns upon sale. As a landlord, it is important to think about the different pros and cons of each potential rental property and how you can work it into your rental property portfolio.

  • Single-family home- single-family homes can work as a great investment for landlords because they are the most popular home in American and are generally one of the easier properties to sell, rent and finance. However, based on the location it may be difficult to make a profit by renting out a single home when considering taxes, wear and tear and other variables.

  • Multifamily homes- Multiply family homes like Duplex/Triplex/Quads can offer a great rental opportunity. These homes are in less demand than single-family homes which means they are often cheaper to buy compared to single-family homes yet offer more potential rental opportunity. Also, financing a multifamily unit has an advantage over an apartment building and other properties that have multiple rental spaces because they are often treated as a single home when financing them. Therefore, with a multifamily home, you can get more renting opportunity than a single-family home with less difficulty in purchasing it than with an apartment building.

  • Small apartment (5-50 units)- Small apartment units offer a unique opportunity to rental investors. While they may be more difficult to finance than a single or multi-family home because in the financing process commercial lending standards are followed, their value is directly based on the income they bring in. Also, they are often too large for smaller scale landlords to invest in and too small for large-scale rental corporations to buy. Therefore, a talented landlord can make a large profit by finding an under-performing small apartment building and raising rent and or reducing costs. However, with a larger property and more renters comes more property management responsibilities and the need for an efficient property management system.

  • Large Apartments - Large apartments are generally large complexes that can include pools, gyms, and full-time staff. They can be tens of millions of dollars to purchase and are often owned by a small group of an investor rather than by a single landlord. They can offer stable returns to investors.

Different landlords and investing may decide to find a niche in the type of property they manage or invest in. Others may decide they want a diverse portfolio and invest in several different types of residential properties. Either way, as your portfolio grows, you will need to make sure your managing your properties efficiently and utilizing the latest property Building Management Software that can manage all your properties in one platform.

This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.