Some ways to think about investment property

In addition to owner occupied housing, I work with a few folks investing in residential real estate.  No, these are not huge conglomerates buying up large apartment buildings.  My clients are primarily buying single family homes, or multiple units, usually up to four units.

Different people invest for different reasons, have varying resources (time and money), and differing investment goals.  Even the financial goals can vary. Yes, everyone wants some return on their investment, but for some a longer slow growth is fine.  For others, access to some tax deductions are the priority.  I'm not delving into the financial side here.  If you'd like to talk about your specific situation and investment priorities, I'd be glad to do so, one on one.

Aside from financial, how do people decide what kind of property to buy?  Should you buy the most you can afford, either in price or number of units?  Newer?  Older?

The first decisions, I think, are if you'll be managing the property yourself, or paying a property manager.  And if the place needs some work, will you be hiring that out, or doing (what you can) yourself?  These questions lay the ground work for what I think of as "the capacity" question.  That is, do you have time and room in your life to take on managing another thing?  If you lead a busy life, what are you going to stop doing, in deference to your new investment? If you'll be hiring things done, perhaps a newer property, in better repair might be best.

A lot of investors favor multiple units, as even with a vacancy here and there, you'll still have income.  With a plex, usually comes more turnovers (management time or fees), and sometimes intra-tenant disputes.  Yes, sometimes landlords can feel like parents.  We had tenants who squabbled about every little thing; who took the garbage cans down to the curb, unhappiness at the shared back yard.

 In general, a plex will always be investment property. when it comes time to sell, you'll be selling to investors, and dealing with whatever the current investment and rental climates.  Changes to tax structure and rental housing laws can affect your investment.

Some folks buy only single family rental houses.  These tend to be more simple to own, and often can have longer term tenancies.  In addition, when it is time to sell, a bit of spiffing can turn that rental into a" must have" for a first time buyer.

I'm working with an out of town investor right now,  who has been grappling with these questions.  For a remote landlord, professional management and simplicity can be important, so they're leaning toward a single family home.  Earlier in the year, I sold a four plex to local clients.  It was their first investment property, so they were thrilled to find a property in good repair, with rents at, or close to market, and fully rented.  They'll be managing it themselves, but having things pretty well squared away, was a good way to start out.

When Don and I were in a buying mode, we looked for things that needed work.  Don has crazy construction and mechanical skills (and really enjoys it) so it was a great way to add value.  And managing our rentals (I'm not a property manager, and don't manage other people's rentals) isn't all that different from my regular work.  We also liked vacant properties so he could get in there and work, and then, we'd find tenants.

One plan doesn't fit all.  Part of investing is very personal, and should mesh with your skills, risk level and capacity.  Our time is a valuable resource, pay attention to how you want to spend yours.  Get in touch if you have questions about investing in real estate.  I'm always happy to talk.  Leslievjones@gmail.com  503-312-8038