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Real Estate Investment Tip - Choose a Niche:

In this day and age the generalist is a thing of the past.  To make money you often must focus on a specific subcategory to effectively market and to know your market.

There are a variety of different portions of the rental market that different owners specialize in and are successful at.  Some examples are:

• Section 8 Rental Assistance, sometimes referred to as HUD housing or rent subsidized housing.  While much of the Section 8 is housing is provided by your local municipal housing authority, there still is opportunity for the private owner to participate in scattered site or voucher rent assistance.
• Corporate housing rentals i.e. relocation housing. As businesses relocate or expand there is often an opportunity to provide rental housing to their workforce. Much of this market is temporary housing or short term rentals while the employees look to buy a home in the area or while they are on temporary assignment.
• Military rental housing for off base housing for members of the armed forces. If there is a military base near your property you may wish to contact them and offer to send a list of available units on a regular basis.
• Short term rentals for people new to the area, those on short term job transfers, people building new homes that had sold their prior residence before the new house was completed or those whose lives have recently changed through divorce
• Low-income apartments typically offer more cash flow for the owner that is willing to work and put up with the challenges of lower income neighborhoods. Other challenges of offering cheap apartments for rent is the much higher cost of maintenance.
• Offering units for rent with pets can also be a unique, but profitable niche if you do it correctly. Owners that succeed in this typically interview the tenant and the pet before renting.  Some owners charge additional deposits, others require the tenant to provide proof of renters insurance as well as name the property owner as an additional insured.  Note: In some communities additional security deposit may be prohibited, so check your local laws
• Lease option or rent to own is another niche that many owners have successfully used for their single family and duplexes.  Here a properly drafted lease option agreement is essential. Every state has different laws. Don’t just grab a lease option document off the internet without first having a local attorney review it.
• Single Room Occupancies also know as SROs can offer an opportunity for some owners. This type of property are also called rooming houses or long term hotels. In many areas of the country these properties offer certain legal advantages over conventional rental properties.
• Tenant-in-Common ownership where a group of owners join forces to buy a property that may be larger than any of them could afford individually.

Each of these niches can be further targeted by the type of property you invest in.  For example some people like to buy condos for rent, others single family homes for rent and still others stick with multi family apartment buildings.  Each has advantages and challenges.

There are ways to use a niche without property ownership.  Examples are offering rent finder services, rental listings, management service and property maintenance.

Over the next few months we will explore each of these in more detail.  To discuss this article and add your own comments for future revisions please go to LandlordGuides.com We also provide an online rental housing discussion forum where you can ask your questions as well as share your knowledge.

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The author, Tim Ballering, has been a Milwaukee area rental property owner since 1977 and is a principle in Affordable Rental Associates, LLC.  He is a current board member of the Apartment Association of Southeastern WI where he was president for ten years.