What is the top niche in REI?

Question

I have been considering which area of REI to begin with: multifamily homes, mobile home parks, or short-term rentals. I would greatly appreciate your guidance and recommendations on this matter.

Best regards,

Ignatius.

Jonathan Greene · Answer

This is a silly question. Nothing is the top niche because it's highly dependent on what you are interested in, who you know in that class, what your goals are, and how much money you have to invest in your education and/or assets.

In general, no one new to investing should start with mobile home parks just from an operations and capital standpoint.

Gino Barbaro · Answer

@Jonathan Greene

Come on! We all know multifamily is the BEST!!

I would agree with Jonathan. It does come down to your goals, your time to allocate, your business sense, your ability to bring or raise capital, and what you are trying to accomplish.

I am personally not a fan of short term rentals, as it appears regulations in many cities keep making it harder. Plus, I think valuations are very high, and it is a full time business, not a side hustle, until you have enough scale to hire out. It is a great way to try to accumulate cash flow with less units, but you need to know where to buy, and underwrite and due diligence are key.

Mobile home parks are a nice asset class, but much smaller. I know they can be very difficult to manage, and many of them are old.

Self storage and industrial are two niches that I think you should also consider. They are both in demand, and appear to be growing, like multifamily.

I would stay away from office and nota big fan of retail strip centers.

Best of Luck

Gino

Todd Anderson · Answer

Ignatius,  I talk with investors every day and there is one things that I know is true about all.  Each investing strategy is totally dependent on the personal goals of the individual investor.  There is no one best product.

The advice you gave gotten from some of these heavy hitters is totally correct.  But it only works if it fits your goals.  The investors I normally move forward with are looking for the stability of LTR and the ease of a turnkey product.  When investing in New Construction, you are controlling the property for the first, BEST years of a buildings life.  Very few repairs and very little drama.

Welcome to REI and best of luck whatever direction you go.

Mohammed Rahman · Answer

Hey @Ignatius Okeke - top niche is the one that works best for you :) !

Ignatius Okeke · Answer

Hi Gino, Your response is quite valuable, and I am grateful for it. This will guide me in deciding on what to begin with. Appreciated.

January Johnson · Answer

The beauty of STRs is that you can invest in them anywhere there is an STR-friendly market.  You can manage them remotely (it's not that hard, no matter what the property management companies will tell you), and you can also vacation in them yourself.  If you want to know more about this niche, read this book:https://store.biggerpockets.com/products/short-term-rental-l...

Henry Clark · Answer

If you’re young, no financial backing, no support, join the military.  Once you reach E5 use the BAH base allowance for housing to start REI.   By the time you are mid 40s you will be a millionaire.  Have a pension and medical.  Then join Civil Service and work overseas and keep doing the BAH.  By then you will be in the top 5% of REI investors by the time you’re 50.  Plus now have two retirements.

As you’re making investments you should always think in terms of risk reward.  The above path has very little risk involved and a real high chance of success.

Henry Clark · Answer

Looking at your background you’re in New York City.  If you’re just starting out that limits you in the size of investment.  Also there are some folks who would never invest in New York City.

Don’t answer the following question on this forum.

1.  How much cash do you have to invest? Or zero.

2.  What will be your finance mechanism?  What will be your downpayment 5%, 10%, 25%?

3.  Combination of 1 and 2 is the size of deal you can do.  If you have $100,000 and downpayment is 25%!then you can do a $400,000 deal.  You want to narrow down your discussions.     4.  As people have mentioned determine your resources.    5.  We do Selfstorage.  We could never do self storage in NYC since $10mm to $50mm deals.  But I like the market in the East Coast.  Would look at the transit systems going N/S/W and build and buy outside of town along the tracks.  Easy to get to.  You can use the same market approach.

6.  Your first investments are always better when they include your personal living requirements.   Or are cash generators.  Get a base level of experience.  Then move into the REI area you want.

Start small and Make Your Big Mistakes Early.

Jana Crum · Answer

@Ignatius Okeke You've received some great advice from everyone. I echo the focus on your personal goals. Investing in real estate is a long-term play so it has to fit into how you want to build your life. In this market that's hard to find cash flow, I'd offer to look into a live-in-flip to get your feet wet & a solid understanding of rehab costs.

Jordan D'Silva · Answer

I think the best is wherever you have a specific niche and competitive advantage. Having said that I'm biased toward flex industrial, mobile home parks, SFR. Happy to discuss more on the SFR side which is my expertise.

What is the top niche in REI?

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