Are you trying to decide whether rental apartments or a home investment is the right choice for you?
If so, we’ve put together this article to answer all your queries.
Real estate is one of the most sought-after careers in the 21st century. Since the global pandemic, the U.S. housing market has been booming. Experts state that there are over 3 million real estate agents in the U.S. and predict that number to grow.
Each real estate agent will tell you there are benefits to both investments.
But if you want to uncover the best option for you, read on until the end.
Factors to Consider With a Rental Home
A rental home and an apartment both share similar traits. However, some significant differences will help you decide what best suits you.
You can find out what makes a house different from an apartment below.
Investing
As of 2023, the national median house price is $428,700. However, depending on where you invest, the cost can change drastically.
Expect to pay more in Hawaii, California, and Oregon, the most expensive in the country. Iowa, Ohio, and Kansas are among the cheapest.
In general, houses have a much healthier value per square foot. That is because they're large and often come with outdoor space.
Returns
Rent yield and capital growth are significant affairs for returns.
Rental yield refers to the money you make on your property by calculating the difference between the final expenses and the earnings. Capital growth is growth in the value of a purchase over some time.
Many factors affect the rental yield. But, there is often better capital growth in houses as the land value increases over time.
Maintenance and Management
When you invest in real estate, there are minimum legal requirements to adhere to, whether it is a house or a flat.
If you hire property management, the cost tends to be higher for homes. That's mainly due to their large scale.
It should also cost you more if you maintain the rental property than a flat due to the roof and outdoor space.
Factors to Consider With Rental Apartments
Studies show that around 70% of citizens in the U.S. prefer living in a house to a flat. Therefore there are a few things to get right before investing in one.
So, take a look at how the housing factors compare with apartments.
Investing
The location plays an influential role in deciding the price of a property. But in general, apartments are cheaper to purchase than homes.
They are smaller than houses, which makes them an attractive investment if you are on a budget.
Returns
As mentioned above, houses tend to receive a higher capital growth. Nonetheless, you should still expect your investment to increase in value.
The rule of thumb is a 7%+ return on apartment investments annually. Over time, you should aim for 8-9% and eventually up to 10%.
Maintenance and Management
One of the upsides for a landlord owning an apartment is the lack of maintenance. Since there is no outdoor space or tiling on the roof, there are little to no significant jobs. Not only will it save you precious time, but it will preserve your cash.
If you are a first-timer, an apartment rental might be more suited to you.
Which Rental Property Should You Invest In?
There are pros and cons to rental apartments and homes. Thus, you must take your time to consider all the factors and decide which one best suits you.
You may be better off working with apartments if you are a first-timer on a budget. If you are experienced and want to invest in property managers, houses might be a better fit.
Whatever you decide, you can invest in our available homes today!
