Pros and Cons of Managing Detached Homes While Investing in Real Estate

Managing detached homes can be a hassle if you own many of them. If you own an apartment building with six units, you can manage all the dwellings by visiting a single location. When you own six detached homes, they probably are not in the same neighborhood. While it's wise to invest in several locations, it does require more effort when managing multiple properties. Driving all over town to show properties to prospective tenants or to collect rent is more trouble than going to a single building.

Driving is not the only potential drawback to owning detached homes. If you own a four unit apartment building, the building may operate on a single heating system. In the case of detached homes, each needs its own heating system. One water connection can service a four unit building, but four water connections are required for four detached homes. You see the pattern here. Because they are independent structures, houses require one of everything, while apartment buildings don't. This makes the cost of buying and operating detaches homes potentially more expensive.

When you use a single family home to generate rental income and the house goes vacant, your income stops. When you rent out a duplex, a vacancy in one unit cuts your rental income in half, but half is better than none. The higher cost of renting a single family home can make a house more difficult to lease than an apartment. On the other hand, many people prefer to live in houses, so a house might rent much faster, and you might get a more stable tenant.

If you are forced to put a new roof on a house, you incur considerable expense for a single rental unit. Reroofing a four unit building might cost a little more, but you would have four rental units to return the cost instead of one. Repairs and maintenance are both considerations when deciding between houses and apartment buildings.

General management of detached homes can be quite easy. If you draft your rental agreements properly and find good tenants, you have little more to do than retrieve your rent from the mailbox each month. In many ways, houses are easier to manage than apartments. People who rent houses tend to be more settled. They often stay for several years before moving. This cuts down on the landlord's expenses and increases profits. On the other hand, it's safe to expect a high turnover rate with tenants who live in one bedroom apartments. Houses definitely have their place in an investor's rental portfolio.

Using the equity in your own home to help you buy other properties is one way to launch your real estate career quickly. Of course this move is risky. If the properties you buy with leverage from your home go sour, you could lose your home as well as the other properties. Therefore, before you put your home equity on the line, you must be comfortable that you are making a safe and wise decision.