Real Estate Investing - What’s All the Hype About?

It seems no matter where you turn today, someone is talking about real estate investing – whether it is flipping a house or investing in an apartment building. But why all the hype? Why is real estate viewed as such a good investment?

There are many different ways to invest in real estate and a variety of property types to choose from – from single family, to multi-family, office space, storage units, mobile home parks and much more. For me, I choose to invest in value-add, buy and hold multi-family properties.

That’s a mouthful! What does all of that mean?

Multi-family: As the name indicates, these are properties that accommodate more than one family (duplex or larger). Properties with 1 to 4 units are considered residential properties, while anything with 5 units or more is considered a commercial property. With this come different financing options.

Some of the benefits of multi-family properties include lower vacancy rates, easier to manage (more units in one location), economy of scales for maintenance (many doors under one roof) and, typically, better returns on investment.

Value-Add: This is a property that, for one reason or another, can be purchased below market value. It might be a building that needs updates or repairs, has been poorly managed by the existing owner or possibly has high vacancy or below market rental rates. By addressing these issues, an investor can increase value (value-add) in a relatively short period of time.

Buy and Hold: As opposed to a fix and flip where the investor is trying to fix up a property and sell it as quickly as possible, Buy and Hold investing means that you retain ownership of the property for many years. Instead of trying to “time” the market for the peak sales price, buy and hold investing is a long-term game. Flipping properties, in my opinion, is a bit of a gamble, while buy and hold properties grow your wealth slowly over many years.

As you can see, we are looking for apartment buildings that we can purchase, renovate and hold on to for a long-term investment. It takes some work, but for us, this is the best investment out there for creating long-term wealth.

What kind of investment properties interest you? Are you planning to buy properties on your own or to partner with other investors?