- Look for properties in your local market that have multiple tenants, as you can better understand local trends and reduce your risk.
- Local storage facilities, office buildings, and multi-family properties like duplexes and triplexes are property types that are best for first-time investors.
For those looking to start investing in real estate, choosing the right type of property can seem daunting. There are many factors to consider, such as location, tenant risk, and potential to grow your assets and savings account balance. In a recent podcast, the National Association of Realtors (NAR) shared three of the best property types for those just starting out in real estate investing.
Local market multi-tenant properties are key
Investing in local markets can be a great way to get started in real estate. By buying a property in an area that you know well, you can better understand local trends and potential for growth. In addition, investing in your local community can be a great way to give back. Look for properties that can attract multiple long-term tenants.
While investing in properties with multiple tenants is generally safer, there are opportunities for single-tenant properties. If you do decide to invest in a single-tenant property, look for one that is backed by a large stable corporation. These types of properties can provide a steady stream of rental income, with low risk of vacancy. Look for properties with long-term lease agreements in place, and strong financials from the tenant.
1. Storage facilities
Climate-controlled storage facilities are a great entry-level property type. These properties can be relatively low-maintenance, with tenants who are less likely to cause property damage. In addition, storage facilities can be in high demand, as people are always in need of extra storage space. Look for facilities with a mix of unit sizes, as well as security measures in place to protect tenants’ belongings.
2. Local office buildings
Investing in local office buildings can be a great way to diversify your portfolio. Look for buildings in areas with strong job growth, or in neighborhoods undergoing revitalization. You can attract long-term tenants, such as attorneys, accountants, and nonprofits, who want to lease space instead of buying property for their businesses.
3. Multi-family properties
One of the most popular property types for first-time investors is multi-family properties. These can include duplexes, triplexes, or small apartment buildings. With multiple units, these properties provide built-in diversification, with multiple tenants to help mitigate risk. Look for properties in areas with strong rental demand, such as those near universities, hospitals, or downtown areas.
Investing in real estate can be a great way to build long-term wealth. Do your research and work with a team of trusted professionals. They can help you find the right property and the right mortgage loan for your investment goals. Even if your credit isn’t that great, they can help you find the best mortgage loans for bad credit. By focusing on certain property types, first-time investors can mitigate risks while increasing their chances for success. Look for properties with multiple tenants, such as local office buildings, multi-family properties, and storage facilities.