MODULE 1 • WEEK 1 • LESSON 4

Property Types Deep Dive

Single family vs multi-family vs commercial (the truth)

⏱️ 20 min 💰 ROI calculator 🏆 Investment picker ❓ 10 questions
Module 1
Week 1
Lesson 4
Final Quiz

The $500,000 Question:

A 22-year-old with $50,000 asks: “Should I buy a duplex, a single-family home, or invest in commercial real estate?” Her decision will determine if she retires with $2 million or $20 million. Here’s how to choose.

1. The Investment Property Spectrum

Every property type serves different goals. Pick wrong, and you’ll spend decades fixing the mistake:

Risk vs Return Spectrum:

Low Risk, Lower Returns

Single-Family Homes

REITs

6-12% annually

Medium Risk, Medium Returns

Small Multi-Family (2-4 units)

Townhomes

8-15% annually

High Risk, High Returns

Commercial Properties

Large Multi-Family (5+ units)

Development Projects

12-25%+ annually

🎯 The Wealth-Building Secret:

Rich investors don’t pick one type – they ladder up. Start safe, build equity, then reinvest in higher-return properties.

2. Single-Family Homes: The Training Wheels

Perfect for beginners, but understand the trade-offs:

✅ Why Single-Family Wins:

  • Easiest financing: 3-5% down, best rates
  • Liquid market: Easy to sell
  • Appreciation play: Follows neighborhood trends
  • Tenant stability: Families stay 2-5 years
  • Low management: One tenant, one lease

❌ The Hidden Costs:

  • Binary income: Vacant = $0 rent
  • Lower cash flow: 4-8% cap rates
  • Maintenance burden: You fix everything
  • Scale problem: Each property = new loan
  • Emotional tenants: “This is our home”

Real Numbers – $300k Single Family:

Purchase: $300,000 (20% down = $60,000)

Monthly rent: $2,200

Monthly expenses: $1,850 (mortgage, taxes, insurance, vacancy, repairs)

Monthly cash flow: $350

Cash-on-cash return: 7% ($4,200 annual / $60,000 invested)

Total return with appreciation: ~12-15% annually

🎯 Best For:

  • First-time investors
  • People with W-2 jobs (easy financing)
  • Markets with strong appreciation (suburbs, good schools)
  • Investors wanting hands-off management

3. Multi-Family: The Cash Flow Kings

2-4 units = still residential financing. 5+ units = commercial territory.

Small Multi-Family (2-4 Units):

Financing Advantage

Still counts as “residential”

3-5% down payment possible

Better interest rates than commercial

Income Diversification

Multiple revenue streams

50% vacancy ≠ 100% loss

Can live in one unit (house hacking)

Economies of Scale

One roof, multiple rents

Shared systems (plumbing, electric)

Lower per-unit management costs

Real Numbers – $600k Fourplex:

Purchase: $600,000 (25% down = $150,000)

Monthly rent: $5,600 (4 units × $1,400)

Monthly expenses: $4,100 (mortgage, taxes, insurance, vacancy, repairs)

Monthly cash flow: $1,500

Cash-on-cash return: 12% ($18,000 annual / $150,000 invested)

Large Multi-Family (5+ Units):

Now you’re playing in the commercial league – different rules, bigger rewards:

What Changes:

  • Financing: 25-30% down, shorter terms
  • Valuation: Based on income, not comparables
  • Management: Professional property managers
  • Due diligence: Environmental studies, inspections
  • Appreciation: You control it through improved operations

🚀 The Value-Add Formula:

Buy underperformed properties, improve them, force appreciation:

  1. Find property with below-market rents
  2. Renovate units during turnover
  3. Raise rents to market rate
  4. Increase property value instantly

Example: Raise average rent $200/month on 20 units = $4,000/month = $48,000 annual income increase. At 6% cap rate, that’s $800,000 value add.

4. Commercial Real Estate: The Big Leagues

Office, retail, industrial, warehouse – where the real money lives:

🏢 Office Buildings

Class A: Trophy properties, 4-6% cap rates

Class B: Solid buildings, 6-8% cap rates

Class C: Value-add plays, 8-12% cap rates

2025 Trend: Remote work = opportunity in Class B/C

🛍️ Retail Properties

Anchored: With major tenant, stable income

Strip centers: Local businesses, higher turnover

Single tenant: Net lease, steady returns

2025 Trend: E-commerce resilient locations winning

🏭 Industrial/Warehouse

Distribution: E-commerce driven demand

Manufacturing: Longer leases, stable tenants

Flex space: Office/warehouse combo

2025 Trend: Last-mile delivery = industrial gold rush

🏨 Specialty Properties

Self-storage: Recession-resistant, scalable

Mobile home parks: Affordable housing play

Hotels: High risk/reward, management intensive

2025 Trend: Housing shortage = manufactured housing boom

Why Commercial Pays More:

💰 Higher Returns

8-15% cap rates vs 4-8% residential

📈 Forced Appreciation

Improve operations = instant value

🤝 Professional Tenants

Businesses vs. emotional renters

📊 Economies of Scale

One property, multiple income streams

⚠️ The Barriers to Entry:

  • Capital requirements: $500k-$2M+ minimum investment
  • Complex financing: Shorter terms, variable rates
  • Due diligence: Environmental, structural, legal issues
  • Management intensity: Requires professional team
  • Market knowledge: Must understand tenant businesses

5. Property Type ROI Calculator

Compare returns across different property types with your numbers:

Investment Comparison Tool

Total property cost
Percentage down
Expected monthly income
Mortgage, taxes, insurance, repairs
Expected yearly value increase

6. Which Property Type Is Right for YOU?

Answer these questions to find your optimal first investment:

How much can you invest?

What’s your primary goal?

How involved do you want to be?

What’s your risk tolerance?

Your real estate experience?

7. Advanced Property Strategies

Once you master the basics, these strategies multiply your returns:

🏠 House Hacking

Live in one unit of a 2-4 unit property, rent out the others.

Benefits: Owner-occupant financing (3-5% down), learn landlording, free housing

Best for: Young investors, first-time buyers

🔄 BRRRR Method

Buy, Rehab, Rent, Refinance, Repeat – infinite money strategy.

Process: Buy below market → Fix up → Rent → Refinance at new value → Use cash for next deal

Best for: Active investors with construction knowledge

💼 Syndications

Pool money with other investors to buy large commercial properties.

Benefits: Access big deals with small investment, passive income, professional management

Best for: Passive investors with $50k+ to invest

🏗️ Development Projects

Build new properties or convert existing ones.

Benefits: Highest returns (20-40%), create value from nothing

Best for: Experienced investors with substantial capital

🏆 Final Project: Choose Your First Investment

Create Your Investment Plan (30 minutes):

Based on everything you’ve learned this week, design your first real estate investment strategy:

  1. Property Type Selection: Based on your quiz results
  2. Target Market Analysis: Using Week 1 Lesson 2 tools
  3. Financial Planning: Calculate required capital and returns
  4. Timeline: When and how you’ll make this happen
  5. Risk Mitigation: What could go wrong and your backup plan

Use This Template:

📋 Template Reference (always visible)

Complete investment plan template:

  • Property Type: [Single Family/Multi-Family/Commercial]
  • Why this type: [Based on my quiz results]
  • Target Market: [City/Neighborhood]
  • Market Analysis: [From Lesson 2 research]
  • Financial Requirements:
  • – Down payment needed: $____
  • – Monthly cash flow goal: $____
  • – Target return: ____%
  • Timeline:
  • – Research phase: [Timeframe]
  • – Financing preparation: [Timeframe]
  • – Purchase target: [Timeframe]
  • Risk Management:
  • – Biggest risk: [What you’re worried about]
  • – Mitigation plan: [How you’ll handle it]
  • – Exit strategy: [If things go wrong]
  • Next Steps:
  • 1. [Immediate action]
  • 2. [30-day goal]
  • 3. [90-day goal]
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🎯 Key Takeaways

1

Start simple (single family) then ladder up to complex (commercial)

2

Multi-family offers best balance of cash flow and appreciation

3

Commercial real estate = higher returns but requires more capital/knowledge

4

Your first property type depends on capital, goals, and risk tolerance

5

Advanced strategies like BRRRR can accelerate wealth building

✅ Week 1 Final Quiz – Property Types Mastery

Question 1:

A beginner with $60,000 wants steady cash flow. Best first investment?

Question 2:

What’s the main advantage of small multi-family (2-4 units) over single family?

Question 3:

Commercial real estate (5+ units) is valued based on:

Question 4:

The BRRRR method stands for:

Question 5:

House hacking works best for:

Question 6:

Single family homes typically offer:

Question 7:

What’s changing the commercial real estate landscape in 2025?

Question 8:

The biggest barrier to commercial real estate investing is:

Question 9:

Industrial/warehouse properties are hot in 2025 because of:

Question 10:

The best long-term real estate wealth strategy is:

🏁 Ready to Complete Week 1?

This final quiz covers all property types and investment strategies. Score 70%+ to demonstrate mastery of Week 1 fundamentals.

Students achieving 90%+ across all lessons qualify for potential benefits with lending partners and employers.

⏱️ Time spent: 20 min 📚 Progress: 3/16 lessons 🎯 Final Quiz: Not yet taken

This Week You Mastered:

  • ✅ Economic principles driving real estate markets
  • ✅ Supply and demand analysis in your neighborhood
  • ✅ Market cycle timing and prediction
  • ✅ Property types and investment strategies
← Back to Week 1 Week 2: Financial Math →