Having your first investment can be pretty exciting. Those who want to invest in real estate can be an excellent way to build wealth and create long-term financial goals. However, as a first-time real estate investor, one pertinent question is: which best-performing properties are a good investment?
The real reason is it all depends on the investor. Many factors must be considered, such as funds, risk tolerance, the deal, the first-time investor’s personality, and understanding of the deal. But two properties may be suitable for first-time investors: apartments and single-family homes.
Here we’ll explore the pros and cons of each property and how they can be the best investment for the rookie investor.
Apartment Pros and Cons
Apartments offer stability and consistent income. Since many tenants are paying for space, the investor is guaranteed to receive rental payments every month. In addition, apartments rarely run out of tenants, so that’s another point to having a consistent income.
It has everything in one place since apartments are commonly mid-rise buildings. That means there is only one roof, one yard, and one heating system that needs to be repaired once damaged.
Apartments are much, much more expensive than single-family homes. While you can buy a single-family home for $60,000 in the market, in apartments that could just be the equivalent of a single unit. Plus, the cost of an apartment also depends on how many floors and units it contains.
There is almost no market for an apartment if you ever choose to sell it. If you do, you’ll only likely sell it to another investor who’ll be asking for a deal.
It might not even be in your range. Apartments are more expensive properties that may not fit your budget as a rookie investor. True, it is a good investment, but does it fit your financial situation at the moment?
Single-Family Home Pros and Cons
Single-family homes are much, much cheaper than apartments. You can buy a single-family home for as low as $60,000, so it fits the budget of a rookie investor.
It has a better, broader retail market. In terms of marketability, you’ll more likely sell five single-family homes than selling an apartment. Homes have a broader market because people look for cheaper houses that they can afford, while apartments are only attractive to fellow investors.
A couple of single-family homes are scattered, which means that you’ll need separate systems for each one. All of them may need repair from time to time, which means it requires more financing.
It can be vacant for long periods. Compared to apartments, single-family homes are more likely to be empty and available for a long time. Apartment complexes offer cheap housing with limited space, but they are also more convenient for unmarried couples and individuals. Single-family homes are marketed towards small families. As the investor, you may end up writing checks rather than cashing them.
Tallying the Results
Both properties offer their advantages, but an apartment may be the better option for a rookie investor because it provides flexibility and stability. While they are much more expensive than single-family homes, the consistent income and better marketability of an apartment make it the better rookie investment.
However, rookie investors must proceed with the deal with caution. You should never assume that deals like this are easy, and you should have sufficient knowledge about the market and your deal to make up for your lack of experience. Start small, proceed with caution, and be wise in your investments!
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