A: I would vote against it. The main driver for the performance of Single Family Homes over the long-term is the astounding 30-year FIXED rate loan. We talk about it all the time. The 30-year fixed rate loan is only given to “1 to 4 residential units”. That means, single family homes, duplexes, triplexes and fourplexes. The minute you buy “5 and over”, you will get commercial loans, which may carry pre-payment penalties in the form of defeasance or yield-maintenance, are likely not to be fixed for 30 years, and may require on-going information on the property performance given to the lender. That is a whole other ball game. I would stick to Single Family homes (or duplexes in GOOD areas).

A: Let’s suppose that you bough a $250,000 home in a given market. That, in absolute terms (and likely relative to the area you actually live in), is not very much real estate. For people living in the San Francisco Bay Area, for example, SIX such homes will be a total of $1.5M worth of real estate , equivalent to a modest home in many parts of the Bay Area. I think that buying a few such homes in that same market, still would not amount to too much real estate. The word “HOME” can be misleading, as people in San Francisco (for example) , automatically think “A HOME is over a million dollars”. In this example, a home is a mere $250K. In fact, we invest in these markets partly due to the affordable prices. It’s fine to buy one or more homes in the same market. It is also fine to buy in other markets as well. This point is quite secondary. The main point is: buying good new homes and getting a 30-year fixed rate loans to finance them, which will likely change your future dramatically.

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