Don’t put all of your eggs in one basket. Isn’t that what we’ve been told since childhood? For those who see that Social Security will not be sufficient to allow us to live the way, we’ve become accustomed to 
living once we retire (if it still exists at all), where do we invest our hard-earned dollars so it’s still there when we need it. There’s too much risk having all of your assets tied up in one place, so we spread it around. 401k’s, IRA’s, mutual funds, etc., but do enough investors give real-estate investment the time and consideration it deserves?
We had seen a reduction in home values starting in 2007, but are now seeing a slow and steady recovery in those values over the 2-3 years. This is a great time to consider adding real-estate to your diversified portfolio. Single Family homes are always a wise choice for any investor, to begin with. Some seasoned investors “don’t touch anything with less than 8 units”, but we all need to be able to walk before we run a marathon. And a marathon is what investing is. Over time, Investment Properties will pay dividends for the life of your ownership of that home. It will pay dividends in the form of monthly net profit (once the mortgage payment has been made) and in the form of tax-deductible interest on your personal tax returns. Over time, the mortgage note will be paid down and the value of the home will likely increase. When the home is sold it will yield a considerable net profit that can be used to pay off your own personal home, or invested into a security that will distribute monthly dividends on which you can live after retirement. And there is nothing requiring you to sell your property/properties. Over 20-30 years, if an investor is diligent about paying down the mortgage note on a home, the balance on that note will be paid off and that home will be Free & Clear. Now your $100-$300 a month profit, just became $1,000 per month. If you purchase 7-10 investment homes, you do the math. Your properties can also be left to your family in your will, and or trust, just like any other type of financial account.
Single-family homes are the most popular choice for several reasons. The sales price and down payment required purchasing the home is traditionally lower than on a multi-unit home. The interest rate for a single-family investment property will be lower than a multi-unit. Unless you employ a property management company, single-family homes are easier to look after and maintain for an investor who chooses to be a Do-It-Yourselfer.
Investment properties are not for everyone. The risk of default is higher on investment properties than owner-occupied homes due to the lack of personal connection the owner typically has to the property. For that reason, the required down payment is 15%-20% higher than for an owner-occupied home. Credit score requirements are also higher and previous credit blemishes are scrutinized a bit more heavily. As an investor purchases more properties, guidelines will require they not only have the funds for the down payment, but also a specific amount in savings, or Reserves, for each property already owned.
For the level headed, responsible, diligent investor, investment properties can be the perfect commodity to expand your investment portfolio into one more “basket”, diversify your risk, and provide you with a number of tangible financial benefits for years to come. If you’ve been curious about becoming a property owner, or if I’ve perked your interest, I’d love to meet to discuss the options available to you.