Homes that are either occupied by the owner or rented to tenants are considered to be residential real estate.
Typical residential real estate asset classes include Single-family homes, Townhomes, Condominiums, Cooperatives (co-ops), Duplexes, Triplexes, Fourplexes, Mobile homes, etc.
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Pros of Residential Real Estate
The main benefit of investing in residential real estate is that people will always need a place to live. Here are some pros of residential property:
There is typically a sizable pool of possible buyers, sellers, and tenants for residential real estate. Because everyone needs a place to live, residential real estate is in high demand.
Ease of Management
A home property could be simpler to manage than a business one. Although many property managers and plumbers know how to fix a toilet; and some professional contractors comprehend how a fire suppression system in a high-rise office building function, residences just need routine maintenance.
In the past, residential real estate has done well during economic downturns. While there is always a need for housing, the necessity for office and retail space can fluctuate, as the recent epidemic has demonstrated.
Low Barrier to Entry
Residential real estate investing doesn’t have a steep learning curve. From settlements to cities, residential real estate is available. The Census Bureau estimates are over 137 million dwelling units in the United States.
When the time comes, homeowners and investors in residential real estate have various options for selling. For a buyer looking for a primary dwelling or another investor, a rental property or owner-occupied home can be sold. The only option available to investors who own commercial real estate is to sell to another investor.
Residential leases usually last for 12 months, which offers a landlord the chance to raise or lower the rent annually under the state of the market. On the other side, if the property is poorly managed or the landlord tries to demand above-market rent, shorter leases may result in more tenant turnover.
Easier to Finance
Residential real estate can be financed in several ways, including conventional loans and loans backed by Fannie Mae and Freddie Mac, FHA loans, and VA loans. Investors in real estate are often required by lenders to put down a minimum of 25% of the buying price. However, investors can apply for low-down payments for primary residence mortgage loans.
Vella Group, LLC is a leading commercial real estate developer and investor based in Los Angeles, Miami, and New York City. Vella Group has the unmatched global experience that has given it market-driven knowledge and skills that allows it to take on even the most complex real estate development projects.
The Vella Group, LLC works from inception to completion and follows an approach that increases the predictability and effectiveness of real estate development projects.
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