Best type of investment in Anchorage or Fairbanks , AK

[Andrey Y.]

What do you guys think? I am talking about straight ROI. This also includes ROI on our time, of course. It seems like SFH and MFH housing depends a whole lot on quality of construction and aesthetic appeal, as houses on the same street price and sell for such different amounts.

It seems like a nice Quadplex would be nice, but there is an argument for a Duplex. More quality tenants?, potentially less time to manage, but likely lower "cash flow".

[Jonathon Rodriguez]

Hey Andrey, 

I am a Realtor in the Anchorage market and specialize in investment properties. Primarily residential rentals (1-4 units) and commercial rentals (5+ units). These tend to have the best ROI when compared to other investments such as office space, warehouse, retail, etc. This is mainly because of the financing options for rental properties. Residential and Commercial living rentals have 30 year amortization loan options and lower interest rates than other type of investment properties. Longer terms and lower interest= better ROI.

Speaking specifically on what type of living rental is best, that comes down to what your situation is. If you are looking at it strictly as an investment property and don't plan on living in it. Your loan options are limited to 25% down on anything 1-4 units and 20% down minimum for 5+ commercial. If you have the ability to buy it owner occupied and live in it for a short time (Typically 1 year minimum) then you have loan options where the down is as low as 3.5% or 0% if you are a veteran of the armed forces. That increases ROI significantly.

Questions to consider: 

Are you looking at it strictly as an investment property? 

Do you plan on managing it yourself or hiring out management? Does that question depend on how many units you buy? Management fees are typically around 10%, so you need to factor that in when running numbers if you plan on have management. (ROI sky rockets on time invested with a manager, but obviously drops with cash on cash)

What do you value more, your time or money? This will help you decide how many units you want to buy or if you want to hire management. 

What are your long term goals? Think 3-5-10+ years out. What you buy today can dictate what you are able to buy in the future. Strategy is extremely important!

Last, have you met with great investment specific lenders to discuss loan options? I can connect you depending on what market you plan on buying in. 

Jon