Investing in a property is a financially lucrative option, especially in a highly profitable market like San Mateo. However, the real estate rates in San Mateo, CA, are high as compared to other cities. Your investment decisions must therefore be backed by rigorous research and an effective strategy, to avoid making a deal that might lead you into loss.

Real estate portfolio diversification

Before we discuss which type of property you should choose, remember that diversifying your real estate portfolio is an essential ingredient for making your investment successful. This aids in minimizing risks, as well as in delivering favorable results in the longer run.

Geographical diversification, for example, has gained popularity among modern investors. It helps in risk reduction by investing in properties across different markets, rather than a single market. It also protects your investments from depreciation.

Types of an investment property

By investing in different types of properties, you can earn better returns from different market segments. There are three main types of investment properties in San Mateo that are popular among renters.

Single-family residential properties

These are large single-family homes with 3 to 6 bedrooms. Since a single-family residential is a single unit, it is unlikely that your rental may stay vacant for long. A constant stream of tenants creates lesser scope for loss. The consistent demand also makes selling the investment property easy.

On the flip side, this type of property demands a lot of maintenance. The cash flow from a single-family residential unit may not be very profitable unless you own multiple properties.

Multi-family residential properties

This property comprises several smaller units in a large building or apartment. Investing in a multi-family residential investment property is financially viable since the individual units can be put on rent. This will not only enhance your real estate portfolio but also generate a positive cash flow.

However, renters are more likely to gravitate towards a bigger home, large space, and better amenities in San Mateo. Additionally, getting a mortgage loan for a multi-family residential can be a herculean task. Maintenance and repairs of each individual unit can also become costly in the future.

Commercial properties

San Mateo has a wide range of commercial properties. Investing in these can yield you a higher rental income than residential properties. Rents from commercial properties can also be more rewarding based on their location and condition.

However, investing in a commercial property has its own set of challenges. The maintenance and renovation costs can be hard to afford. The loans for such properties also have a very high rate of interest. Also, there are little to no tax benefits that you can avail while renting a commercial unit. You might have to deal with long-term vacancies since finding commercial tenants can be challenging.

Finding the perfect investment property can be tricky and challenging. It is advisable to consult qualified and trusted property managers such as Bayside Management who will guide you through this process. Your choice of investment will depend on your budget, your loan credit capability, and your expectations from the place.

Founded in 1982 in Marin County, Bayside Management has expanded to offer full-service San Mateo property management to the entire San Francisco Peninsula. We manage single-family properties, multi-unit complexes, commercial properties, and homeowner associations. Connect with us to discuss all your investment property-related queries.