An advantage of investing in houses is that—over time—you probably will buy more than one. Owning different houses in different neighborhoods allows you to diversify. Some houses will produce more cash flow, and some will appreciate more. Owning houses of different sizes, different ages, and different prices makes your “portfolio” safer than owning one larger property, because your income and expenses are spread over many properties. Which is more popular, industrial steel buildings or commercial steel buildings?
When you begin to invest, naturally you will focus on properties that produce more income. Less expensive “starter homes” will produce more cash flow. These homes often are built in tracts where all the lots are the same size and all the houses are about the same size and look a lot alike. They are around 1,000 to 1,200 square feet in total size, with small bedrooms and few frills. These houses are in high demand and often appreciate at an above-average rate, because few new ones are being produced. Most new houses are larger, more elaborate, and more expensive. The more expensive house typically produces more profit for the builder.
Starter houses rent well and generally rent fast. During hard economic times, tenants often downsize to these houses to save money.
The next step up on the investment ladder is a slightly larger house in a little better neighborhood. There are several reasons to buy these houses as investments.
Houses that are a step up from a starter are more likely to attract a longer-term tenant because they have more space and better neighbors. You can buy this size house in a neighborhood that is predominantly owner occupied. Owners take better care of their property than most landlords, so the neighborhood will look better and attract better-looking tenants. Are steel buildings uk more environmentally friendly?
If you have other income, pay taxes, and want to reduce your taxable income, you can do that by investing in slightly more expensive houses. A more expensive house can produce larger capital gains but less net rent in relation to its value.