Is there a certain type of real estate that works best as rental property?

I am curious if private homes,condos, zero lot homes,patio homes or duplexes are best for rental investment property.

Good question.

For rental income, I find it best to stick with lower-income properties, such as small 3-2 homes, condos or townhomes. In the Phoenix area, it may be difficult to find a 4-plex that's for sale for a reasonable price - the per unit cost is often too high to make it cash flow.

However, teaming up with a group of investors to go in on a larger complex sometimes makes it a worthwhile thing for everyone, as the per unit cost is often lower.

A few keys to remember when investing in real estate:


Scrutinize the investment opportunity using several proven criteria.

1. Equity Acquisitions
2. Cashflow analysis
3. Turnkey solutions from start-to-finish


I'll discuss each of these below.

1. Equity Acquisitions - This is step one: finding
properties that are undervalued, going for a deep
discount. Many times these are short-sales or
pre-foreclosures, where we often get some of the best
deals. The idea here is that the property you buy
today could be sold tomorrow for much more than what
you paid for it. This is what I call, making money
from buying. Our investment team presents
some of the best investments from an equity
acquisition standpoint.

2. Cashflow Analysis - This is where our property
management team comes in. We can determine with a
high level of predictability, which properties will
rent, for how much, and what type of maintenance will
be required. After running thousands of properties
through step one, we'll be punching numbers and
estimates here in step two to find out which of all
the properties make the most sense from a cash-on-cash
standpoint. We'll even forward you the spreadsheet so
you can play with the numbers and figures to see how
changing certain variables (such as the interest rate,
down payment, or rents) changes the cash-on-cash
return.

3. Turnkey Solutions - Our job here is to make the
entire transaction smooth and seamless for you as the
investor. We'll be presenting investment
opportunities to you on a monthly basis - our top
picks, and we'll try our best to customize the
properties to your personal investment goals - one
size doesn't fit all, and we understand that. If
you're interested in moving forward on a particular
property, just let us know. We handle all the details
and dirty work, from start to finish (and hopefully,
if you buy right and have a good management company -
eh hem, that's us - you won't want to sell your
property anytime soon. We're in it for the long-haul
right there with you. Unlike most Realtors selling
you a one-time property, our success is tied directly
to your success.

It all really depends on how the market is for the different types of property in your area. If you are near a college, almost any type of property would work. If there are a lot of apartments available in the area, then condos aren't going to offer much of a help.

I'm a Realtor and I buy homes for investment as well as represent several other investors.

We have had the best results with 3 bedroom, 2 bath, single family homes in the under $175,000 price range.

Easy to rent, easy to maintain, easy to resell, and usually good appreciation.

We don't like condos because of the added monthly fees and some HOAs.

You will get many opinions on this question. I am a real estate investor in CA. The number one factor to most investors is cashflow. If you are using a mortgage to purchase the property, then how much are your payments, maintenance costs, taxes, etc. going to cost you on a monthly basis? Are all these costs going to be covered by the rents you will be charging on the property? If you are buying a property with your own money, then how long can you afford to have your money tied up by the house? The type of property usually isn't the biggest factor but the more units you can rent out at the lowest cost is best in my opinion. Many real estate agents will tell you its ok to lose a little money on the property because it will appreciate over time. History has shown the housing market has its cycles. Many people who took this advice are losing properties left and right in my state.

Hope this helps.