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What is Residential Rental Property?

Residential rental property is defined as a dwelling bought by an investor and occupied by tenants under a lease or other sort of rental arrangement. Residential property is land zoned expressly for individual or household living or habitation; it can range from single-family homes to big multi-unit apartment buildings.

How does it work?

Residential rental property is a viable investment option. Many people have firsthand experience with both the rental market as renters and the residential real estate market as homeowners, unlike stocks, futures, and other financial instruments. Residential rental properties are less daunting than other investments because of this familiarity with the process and the investment.


Residential rental property ownership might provide tax benefits that other, more indirect real estate investments, such as a real estate investment trust (REIT), do not. Of course, direct ownership of residential rental property entails the obligation of acting as a landlord or hiring a property management business, as well as the dangers associated with vacant units and tenant turnover.

6 types of Rental Services

  • Single Family Homes- The most frequent type of real estate is single family dwellings (or SFHs). As the name implies, these homes are usually large enough to accommodate a single family and do not share any walls with other units.
  • Multi Family Real Estate- Any sort of residential real estate with more than one unit is classified as a multi-family property. Small multi-family properties are those with two to four units, and their value is determined by comparable residential properties in the region. The value of large multi-family properties — those with five or more units — is calculated by comparing the return on investment of similar commercial properties in the same market.
  • Condos and Townhomes-Condos and townhomes are a cross between single-family residences and multi-family housing. Each apartment is owned separately, but there are common amenities supplied by a homeowner's association, such as a tennis court, pool, and grass maintenance (HOA). There are some distinctions between the two, so do your study, but we'll look at them together for the purpose of simplicity.
  • Foreclosures- Foreclosures are properties that have been taken over by the bank after the prior owner defaulted on their mortgage payments.
  • Fixer uppers- Fixer uppers, like foreclosures, require some cosmetic repair or rehabbing, but they are held by homeowners rather than a bank.
  • Commercial Real Estate- Commercial real estate is land that is used to house commercial businesses such as supermarkets, hair salons, restaurants, and so on. 
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