It is factual that many investors purchase single-family houses followed multiple homes as rentals. While this is a logic business idea, it comes with a lot of challenges that the same investors should be aware of. For most real estate investors, however, the idea seems lucrative, and it is easy to maneuver. However, there are different market shifts in this business, and it is crucial for people to understand the business. Other than owning a home being attractive, it is also factual that time and different economic situations can influence the growth of the business. Nevertheless, investors seeking a diversified approach to this business can bank on their ability to balance in real estate investing. Also, they can rethink a successful strategy that will help them accomplish their objectives. As Chris Linkas puts it, owning home rentals has its shortcomings;
- An Unsustainable Cash Flow
If you are working with a mortgage lender, then you are purchasing with debt. As a rental homeowner, you should know that single-family rentals offer little to no reliable cash flow. Investors can justify this by acknowledging their ability to make mid-term bets on the market. This means that they focus on the appreciation of the market.
- Too Risky for the Common Investor
Owning a single-family rental needs the investor to always assume over 100 percent equity through taking a debt. Even though this sounds substantial to some extent, the risk is often overlooked by investors. On the other side, a rental owner might be exposed to more risks compared to their initial investment.
- Property Management
When it comes to property management, single rental homeowners can either manage the home’s single-handedly or employ someone to handle it. Either way, they will have to pay for the services.
Far from owing single rentals, Chris Linkas advices entrepreneurs to look into commercial real estate where the risks are pretty manageable since it all depends on the different market shifts in the economy. Other than that, it is pretty easy to manage the commercial property as people can always invest in the business as a team.
Who is Chris Linkas?
Chris Linkas is an investment expert specializing in opportunistic investment. He has been working in different sectors for about 20 years and has the qualifications to offer investment advice.