You’ll find endless debate in real estate circles about whether you should buy houses, mobile home parks, apartment buildings, raw land, or commercial buildings. It’s impossible to say that every person should concentrate on one or the other, but I agree with John that for the average, small investor, you can’t beat houses for many reasons.
Let me show you a few strong benefits of houses as investments.
Houses Are Safe
Even during bad real estate markets, ask any banker what they’d rather loan money against – a single family house in a nice residential neighborhood, a large commercial property, or a piece of raw land? A single family house is the answer. That should tell you something.
Houses are relatively stable and tend to hold their value. There are many more buyers for houses than other types of real estate. Vacancies are much shorter because the demand for residences is always high compared with commercial properties. This all translates to safety as an investment.
Houses Have Non-professional Sellers
When you buy houses, you often deal directly with a seller who is not a full-time, professional investor. Investors normally want to make a profit when they sell. They’re often better negotiators than you are. A normal homeowner may be selling for non-financial reasons, and solving that problem can be worth money to them. This means you can sometimes buy for below market prices and financing terms.
Unlimited Supply of House Deals
Every day new sellers decide to sell their houses. People move, start families, get divorced, retire, and pass away. There are many more single family houses in your average town than any other type of real estate investment. This means you’ll always have houses to shop for.
Houses Attract Lower Management Tenants
Compared with apartments, lower end houses, and mobile homes, tenants for decent houses in decent neighborhoods are much more self-sufficient and tend to pay on time more often. If you value a wealth of free time and addition to a wealth of money, this factor is crucial.
Houses Tend to Sell for Retail Prices and All Cash
This is perhaps the most compelling strength of single family houses. The federal government has a long-term vested interest in subsidizing the housing market. It’s very political that people are able to buy houses. Therefore many loan products are available that allow buyers to purchase a house and cash you out when you sell.
Chad Carson is a member of Metrolina REIA (metrolinareia.org), which provides education, networking, and networking for real estate investing in the Charlotte region. Chad also writes about real estate, money, and life at coachcarson.com.