Income property - what's the best type?
 

I'm back on this idea again, now considering local properties to purchase and rent out. Leasing is a bit slow, and I've got cash piling up in the bank. I'm just starting my research right now, but the one question I can't seem to find an answer to is what kind of property will bring the highest return? A nice suburban detached two storey home? A condo downtown? A row-house or townhouse in a decent area? A slum on the wrong side of the tracks?

Forget the other issues for now (of which I'm well aware), I just want to consider the rate of return, and what will generate the biggest profit.

The generic answer is the property you can rent for the highest amount while purchasing for the lowest...but since that doesn't help anyone, here's my take.

Personally I have been looking for a small multi family, somewhere in the tri/quad plex range. I feel like that kind of property spreads the cons out (vacancy, higher rent as a whole). If you want say $2000/month for a property, I feel like its easier to find 4 couples willing to pay $500/month for a smaller place than 1 family willing to pay $2000 for a single family house. You do have to take into account though that you will also have 4x as many headaches if you dont get the right kind of tenant.

For simple rate of return, I have seen recommendation of commercial over and over again, but I know very little about commercial.

I own two houses on one lot and rent the other out...

Being a landlord (for even just one unit) sucks donkey b*lls...

If I were looking for income property I would buy a storage unit facility, people load and unload their junk themselves, you get them to sign a contract first and collect rent... if they don't pay you sell/throw out their junk and get another tenant.

Commercial property...

You couldn't pay me anything to be a landlord again. I'm bleeding money on my rental prop. and can't sell it for a while. I would also consider a self-storage property. I've heard, in a lot of areas, they are simply put there as a way to pay for themselves until the land becomes very valuable and can be sold off to developers.

Self storage is big business. With proper marketing they make good money. It's one business we target heavily....

The type with a brass pole that ladies dance around.

self storage.

Sort of a different suggestion but a friend of mine just purchased three of these coin-op car washes and he's making a killing on them. He put about 10k into each of them to do some upgrades but he's recovered that cost already. Seems to be largely a "hands off" business as well since he's off hunting for a month right now.

I have a friend making a killing right now, leasing sort term commercial office space to companies (mostly law firms) who temporarily need the space for projects for a couple weeks or months. the offices are ready to go with furniture, phones, wifi, fax machine, and can even set you up with computers. so nothing to move in, all the clients need to do is have their people show up and they are ready to start working on day 1.

My choice also. I'd be a terrible house landlord.
Jim

We just chose to buy a condo for vacation rental. This is such a tourist based economy here and we like the idea of not having to get into the personal lives of our tenets. And it will be great to have a place for Family and friends to stay.
It made a great fall back place during the tsunami evacuation the other night.

I'm in the middle of a refresh in the unit, so we haven't really seen the cash flow yet.
But in running the numbers it will have to be rented nearly sixty percent of the time to break even. That's without mortgage costs. Kauai averages between 65%/ 75% occupancy year around. At that, as a minimum occupancy, the return should be in the 5% / 8% range, not great, but there is the upside in value as the market recovers.

A number of friends have vacation rental units here and have been able to build up solid return business into the 90% range. Then the numbers look much better.

I'll be stoked to have a good spot for pelicans to roost while on island.

Cheers Richard

I used to own self-storage and I'd do it again in a millisecond.

We have a condo we rent out. ROR based on purchase price 2%. Pay no taxes on that income because there are so many deductions, condo fees, CCA. If we had to do it again I would buy a house. Why? No condo fees. No surprise special assessments(have not had that yet).

The above suggestions make more sense, storage units, commercial properties etc.
We bought the condo thinking that we might live in it. 50+ bldg. Too many grouches me included!:)If u do insist on buying a condo pm me, I will talk u out of it!

Please telll me more about this. I'm getting killed on my condo and the tax benefits don't seem to help much. I'm told I can only write off 50% of the losses because wife's and my incomes. I'll lose a good $5k in 2012 between rent and carrying costs. How can I write off more than $2500 of those losses?

^ gulp.

yup..i tried. very expensive to buy in. (land)

but it makes sense. no tenants to argue with..no real upkeep to the property, minimum employee costs, tenants quit paying, you get to sell their junk.

not dealing with people on a day to day basis would be excellent. i read somewhere that the bay area is at 100% occupancy.

A lot of sketchy customers at self storage places and a lot of shenangians going with the trucks they rent. I had my access code blocked once when I was trying to get in with a van I had rented to unload stuff. It was a Sunday night. They told me my credit card had expired, but had made no effort to contact me. I got some other renter to let me in and store my stuff in his garage until it was sorted out. I also got charged for something like 40 miles when I had only gone 18 miles and done it all in less than an hour. They can be very shady in trying to wrench fees and penalties out of renters.

I was a terrible house landlord because I was too nice. If you are going to rent to real people, you'd better be a steely-eyed Nija, emotionless and willing to turn a deaf ear to the every sad song sung.

I will never own rental property again.

We burned down our last rental property, covered it in dirt and planted grass.

Commercial property, "triple net".