Single-family homes have the widest market appeal. Single-family homes have lower rates of vacancy than commercial property because there are more potential renters for a single-family home than there are for a convenience store, laundry facility, restaurant or a strip center.  Single-family homes have the most appealing financing terms available and never become technologically obsolete.

Compare this with an investor who buys a retail center and then online shopping and a slow economy make this property obsolescent.  Video stores are being replaced by Apple and Netflix.  Theaters are being replaced by home entertainment systems.  Soon you may see gas stations becoming technologically obsolete because of electric vehicles.

Single-family homes typically sell faster and have more liberal access to financing than any other type of real estate.  Single-family homes can be purchased with fixed-rate financing which has been for some time now at historic lows, with a thirty-year amortization and relatively low down payment.

If you want to cash out some of the equity in your real estate portfolio, you can sell or refinance one or two single-family homes rather than liquidate an entire apartment building.

The income tax benefit from depreciation strongly favors single-family homes over commercial property.  Single-family homes can be depreciated over 27.5 years while commercial property is depreciated over 39 years.  The shorter depreciation schedule of single-family homes can be a great boost to an investor’s initial cash flow.

A word on buying condominiums: Don’t! I HATE THEM!  The only winner in the world of condominiums is the developer who originally sells the condo to the general public.

Condos come with the huge expense of a Home Owners’ Association (HOA).  Some of my past concerns:

• Overpaid vendors
• Restrictions on property usage
• HOAs are run by an untrained volunteer board
• HOA dues are variable
• Your neighbors’ failure to pay means you pay
• The inability to get condo financing can decimate condo values
• Lack of volunteers

These negative factors apply to all types of condos, but none of these factors apply to my favorite cash flow investment… single family homes!