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Updated almost 12 years ago on . Most recent reply
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Average ROI for different types of real estate
Has anyone see average & median ROI for different real estate niches over longer periods of time (like 5, 10, 15, 20, 30 year)?
I'm trying to compare stock portfolio return to returns from different real estate niches to determine if I should focus my time on REI. I keyed in on the following article which seemed to imply that single family homes have less return than other options, but it didn't offer any specific numbers:
http://www.biggerpockets.com/real-estate-investing/strategies-niches
- Raw Land
- Single-Family Homes
- Duplex/Triplex/Quads
- Small Apartments
- Large Apartments
- Commercial
- Mobile Homes
Ideally it would be published by a 3rd party organization somewhere..
I've been digging through different articles / forum posts and maybe I'm search inept, but I can't find a nice table with everything together. I see people talking about infinite returns, but eventually you run out of time maintaining current properties and finding new opportunities so I see this as a false argument. Maybe the first 3 properties have a high return, but eventually it slows down and I'm interested in the longterm returns the average / median person achieves. I know there is turnover involved and generally the people I've observed who own property don't go beyond 3 properties (I have no idea if this is the rule or my limited experience).
You all have an incredible amount of knowledge so I appreciate any help you can give on helping expand my mind.
Thanks,
Jim
Most Popular Reply
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JC Skweres,
I am admittedly biased so take my words with a grain of salt but generally speaking my vote would be for Self-Storage as the best vehicle for one's money. Please don't perceive the following as immodest as I share only to help others discover this incredible niche. I base my bold statement about Self-Storage on my personal success in that niche (recently turned 40K investment into 60K per year in positive cashflow and increased equity in the property from the 40K I invested to $500K in just 18 months.....hence the bias:) but also on some key statistics.
1) Self Storage REITS were the top performing REITS for 2011 with returns of 35.22 and second for 2012 (to the Timber REIT) coming in at 19.94
2) Self-Storage Backed Loans default less than any other real estate backed loan on the PLANET (including owner occupied homes).....less than 8% default rate says something about the health of an industry.
3) Income to Expense Ratios hover around 33% in Self Storage compared to 50+% for apartments/offices, etc.
At the very least, I would encourage you to take a look at this niche! All the Best,
Mike