There is no short and sweet way of answering such a question as every individual has their own financial goals for retirement. While some may project a need of $30,000 per year, others may require $90,000. Therefore, it’s best to use the following formula:
- Investing in high-end real estate vs. cheaper properties?
More expensive real estate has a higher appreciation, higher revenue, and is easier to manage than multiple cheaper properties; however, one month’s vacancy has an increased impact on your wallet. With multiple cheaper properties, they are easier to acquire and are more likely to rent quickly; however, it will involve more time and energy to manage additional rentals. There are pros and cons to each and a combination of the two seems to be the best approach.
- Single-family vs. multi-family units. Which produces more cash flow?
Single-family properties will have a higher loan and higher cash flow while being more easily acquired through mortgage brokers. Tenants also tend to stay longer as they are saving to purchase their own home and are rebuilding credit—equating to rental fees being paid on time. Multi-family, on the other hand, will have a lower loan per unit and lower cash flow per unit and are harder to acquire through commercial brokers. A major perk is having multiple tenants under one roof—meaning, lower maintenance costs and ease of management. Though both options each have their benefits, you should invest in the area that resonates most with you, while keeping in mind annual profits and appreciation.
- Do you have more questions?
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