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Residential real estate investing is an exciting and accessible way to build wealth. Whether you are already investing in commercial real estate and want to diversify your holdings or you are looking to add your first real property asset to your portfolio, residential real estate is an excellent choice.

Compared to commercial real estate, residential properties offer a more predictable (and sometimes quicker) path to value. While commercial real estate has its merits, residential investments appeal to those seeking stable returns while positively impacting key communities across the nation.

Why Residential Real Estate Is a Smart Investment Choice

Here are some reasons why participating in the residential real estate market can be a smart move for your portfolio.

Steady Cash Flow

There’s a consistent demand for housing across the country, but this demand is especially dramatic in rapidly growing markets. Still, residential properties tend to attract tenants in all regions and economic environments.

Investing in housing can provide steady cash flow in the form of rent payments. Apartment buildings can be particularly effective at generating income. Multiple units create a safety net against vacancies, giving you an opportunity to cover your expenses and earn a return without waiting years for appreciation gains.

Appreciation Potential

While the appreciation rate of residential real estate fluctuates year to year, the housing market has been enjoying a period of strong appreciation over the past decade. Since 2012, the average yearly increase in value for homes has been approximately 7.7%, making single-family rental properties a strong long-term investment option.

Multifamily properties are enjoying a similar stretch of rapid appreciation, largely due to housing shortages and urban growth trends.

Tax Benefits

Residential real estate investing comes with a host of tax advantages. For example, the IRS allows you to deduct some of a property’s value every year as depreciation, reducing your taxable income.

You will also likely be able to deduct repair expenses associated with your residential assets. You may also enjoy lower capital gains taxes for long-term investments. These advantages make real estate a tax-efficient holding that you can use to balance out profitable but less tax-efficient assets.

Lower Risk, Particularly for Multifamily Properties

2024 marked one of the largest waves of new multifamily unit supply in several decades. Despite this growth, average occupancy rates in many of the nation’s most competitive markets hovered above 94%.

The risk associated with residential real estate is generally lower than many other investment types. For example, multifamily properties spread risk across multiple tenants. If one unit is vacant, rental income from others can offset potential losses.

Social Impact

Residential real estate investing offers you a chance to make a positive impact on society. When you invest in well-maintained, affordable housing, you contribute to addressing housing shortages and improving communities in key development areas.

By partnering with OpenPath Investments, you can align your financial goals with your values. We are passionate about environmentally and socially conscious investments that leave a positive impact.

Strategies for Success in Residential Real Estate Investing

Can you do both commercial and residential real estate? Absolutely, providing you have a solid plan and the right partners in your corner. Here are some strategies that promote success in residential real estate investments.

Conduct In-Depth Market Research

Success starts with understanding the market. Identify high-demand locations and monitor trends like population growth and average rental rates.

OpenPath Investments excels in market research, and we understand it is the backbone of a profitable portfolio. Our data-driven approach minimizes guesswork and helps you make informed decisions that support your long-term portfolio goals.

Stay Up to Date on Emerging Trends

Tenant preferences and market conditions are constantly evolving. Staying informed about trends that could impact rental rates, like the rise of remote work or the growth of second cities, helps you capitalize on lucrative investment opportunities.

At OpenPath Investments, we have an entire team dedicated to watching real estate trends and exploring how those developments impact our clients. This foresight allows us to support your investment journey more effectively.

Focus on Diversification

Diversification is key to managing risk and amplifying returns. Combining commercial and residential real estate investments can be a great way to balance your portfolio while increasing resilience against market fluctuations.

With a portfolio that includes multifamily and industrial assets, our well-rounded approach to real estate investing allows us to make a positive social and environmental impact while delivering positive outcomes for clients like you.

Leverage Professional Property Management

Property management can make or break a real estate portfolio. Partnering with the right firm can help you mitigate expenses and optimize occupancy rates while providing positive tenant experiences.

OpenPath Investments has an in-house property management team that handles all of our clients’ residential and multifamily properties. This vertical integration allows us to curate the entire investment journey, ensuring that every tenant interaction aligns with our values and mission. You can enjoy peace of mind knowing that your investment is in good hands — ours.

Choose an Investment Firm Aligned With Your Goals

At OpenPath Investments, we facilitate residential real estate investing with a focus on multifamily properties.

Our strategy has a dual focus: We want to help you build wealth and, at the same time, drive meaningful change for tenants, lessees, and buyers. By teaming with us, you can make investments that support your financial goals while leaving a legacy you can be proud of.

Maximize Your Returns With a Trusted Investment Partner

For many investors, residential real estate offers stability and consistent cash flow. You can strengthen your investment portfolio by leveraging the above strategies and teaming up with an experienced firm.

With a focus on value-driven strategies, OpenPath Investments connects investors with high-performing properties while positively impacting communities. Are you ready to start your residential investing journey? Contact OpenPath Investments to learn more about our residential real estate investing services.