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Benefits of Residential Real Estate

Benefits of Residential Real Estate

Residential real estate investing is a terrific way to build passive income. People are increasingly seeking information on how to properly invest in real estate so they can reap the benefits of what investing can provide. While there are several different types of strategies and property types, residential real estate is the most common type of real estate people purchase and there are several reasons why.

The first is because in the event of an economic crisis or pandemic, everyone still needs a place to live. If the economy takes a hit, businesses usually suffer. So, if you are invested in commercial real estate and businesses that are renting from you, but financially affected, you may see an increased number of vacancies. Also, marketing to new businesses can be challenging. Housing, on the other hand, is always in demand, which leads us to the next benefit.

There is a large pool of people to sell or rent to. Compared to commercial real estate, which usually relies on businesses or corporations to rent to, residential is so much easier to market to, especially if you are in an area that is on the rise. With this, there is usually a decreased tenant turnover if you are focused on single family homes. Multi-family can have a higher turnover, but with single-family homes, people like to stay put. You may find long-term renters who prefer a lease-option or rent-to-own. Long-term tenants can be a great confidence booster in the event of an economic crisis and can potentially lower your risk of vacancy.

Residential real estate also has less restrictive zoning laws. With commercial, we are dealing with permitting, zoning, inspections, rules and regulations, city requirements, public utilities, etc. All of which can delay projects and require more money. Residential rules and laws are much more lenient.

Lastly, residential real estate provides a fantastic way to obtain properties at a low cost of entry. There are so many creative ways to get into real estate financially, and when you are dealing with a homeowner directly, obtaining that property can sometimes happen for little to none of your own money. Hence, no out of pocket expense to you. Nonetheless, even if you do not get into a deal creatively, the cost of investing in residential real estate is typically less than commercial real estate. Down payment, interest rates and terms can be much more advantageous for residential real estate on the surface than commercial.

Not only is it a terrific way to set yourself up for a supplemental income, but also to eventually provide you with a positive cash flow. Residential real estate investing is not the only way to invest, but it is the way to get started. For more information on real estate investing, visit our website.

Areas of Review

Takeaway

Big picture takeaway points

  1. Residential real estate will always be top of the investing list due to the fact that everyone needs a place to live.
  2. Compared to commercial real estate, which usually relies on businesses or corporations to rent to, residential is so much easier to market to, especially if you are in an area that is on the rise.
  3. Residential real estate provides a fantastic way to obtain properties at a low cost of entry. There are so many creative ways to invest compared to commercial.

Reflection

Self-reflection questions to think more about the content

  1. How many residential properties do I have? If none, what is my goal?
  2. What about investing in residential properties do I like the best?
  3. What creative financing strategy would I like to use to invest in a residential property?

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