Demographic shifts change #markets. Particularly on #realestate. The new trends are in favor of #singlefamilyhome portfolios instead of #multifamilyhousing properties. The reason is the exit strategy. While you can easily dispose of a #SFH, disposing of a multifamily property on a high vacancy market in a profitable way, requires the stress of doing a #condominium conversion and selling individual units.

For more detailed info look at the entire original post at: Demographics: Renting vs. Owning by Calculate Risk.

SFH – Single Family homes

This is the classic landlord-tenant model of real estate investment: the landlord buys a property, rents it out to a single household, then pays the costs of mortgage, maintenance and so on while receiving the rent as monthly income – which goes up enormously once the mortgage is paid off.

Knowledge of the market

It’s vital to do your research, but ultimately you have to be able to trust that your local partner investment manager knows more about the local real estate market than you do. The key word here is ‘local’: you need the company or person that manages your real estate investment to have a comprehensive understanding not only of the state and trends in the real estate market, how they apply to the city or state where your investment property is located.

1. Understand the real estate cycle before investing

   The first thing we need to know to start to analyze any real estate opportunity is to understand where we are on the real estate cycle. And this is extremely local. What happens in a specific neighborhood might be completely different from 5 miles away. Are we on an uptrend or downturn? How long has the market been on that stage? What are price trends signaling? Is the market changing or close to a change?Although there are good real estate investments in every cycle, different markets require different approach and investment strategies.

2. Follow demographic trends

   Nothing is more powerful then demographic trends. They can override economic cycles creating a different reality in a specific city or state. Fundamentally, we need to be aware of the social-economic changes. Watch out for migration and age shift trends as they require specific products and services.

3. Always buy cheap

   It is very difficult to make returns out of an overvalued property. Do a thorough real estate comparables analysis before any purchase.