Suppose you’ve wanted to invest in real estate as an investor but aren’t sure if you should invest in single-family or apartment buildings. This newsletter will give you four questions you need to answer to determine which path you should take.

Do You Have The Time?

If your schedule is already chaotic with work or family obligations, adding a single-family home as a real estate investment will take up even more time.

Unless you have the capital to hire a property manager as your minimum employee, you will be responsible for interviewing tenants, doing maintenance and repairs, and collecting the rent.

A better alternative would be to invest your money into apartment buildings, preferably over 100 units, for the best profit opportunities where you can earn passive income without trading in the time to reap the benefits.

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Can You Handle "Bad" Tenants?

Just because you take pride in all the time, money, and work it took to make your real estate investment beautiful, doesn’t mean your tenant cares.

Do you have a plan for which steps you will take to deal with a tenant that has lost their job and can’t find employment, or worse, a tenant that refuses to pay their rent and has become a squatter?

As mentioned, you need to hire an excellent property manager to avoid dealing with bad tenants and the other operations of owning your single-family investment.

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Can You Handle When The Market Has a Downturn?

A misconception about real estate is that it’s a “get rich quick” opportunity. Don’t be deceived by the gurus that are gambling or have luck. If you hold “bad” properties during a market downturn, you will be tested financially and emotionally.

Remember the crash of 2008? Investors that paid too much for properties lost their investments to foreclosure.

None of us know when the “bottom” market is, so if you can’t handle financial downturns, consider not investing in single-family rental properties.

How Do You Rate Your Interest In Real Estate Investing?

Consider single-family investments if you can handle the risk, have the money to invest, and have the time to learn and get your hands dirty.

On the other hand, if you have a greater interest in investing in other asset classes such as stocks, bonds, etc., but you want to diversify your portfolio into real estate. You should consider investing in apartment buildings to benefit from the above-market returns.

If you aren’t quite ready to invest the time or money into real estate investing because you aren’t sure which is best for you, speak with a financial professional about which opportunity will best benefit you.

Conclusion:

You must understand the benefits and risks no matter your path. It’s essential that you go through each of these questions as a starting point to see where each option will work on your timeline.

If you’re married, include your spouse in the conversation.

Real estate can be life-changing for the better when executed correctly.

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