The answer to that will vary based on the investor and their individual goals. Each type of asset has its advantages and disadvantages. 

• Single Family – Easiest to manage, easiest to lease or sell as they often have a wider appeal, and easiest to get financing for. However, this asset suffers most from vacancies as there is only a single tenant to pay rent, and as such the total income of the property is often lower than multifamily. 
• Small Multifamily (2-4 units) – This asset offers diversified income, as the total income is from 2-4 tenants, and shares the same ease of acquiring financing as single family. This asset becomes a bit more tricky to manage with multiple tenants, and is still a bity slower to scale to higher income levels. 
• Large Multifamily (5+ units) – Operational costs tend to be lower, and these properties are the highest earning potential of residential real estate property. However this comes with a cost, as large properties are complex to manage efficiently and effectively, as well as being more sensitive to market fluctuations or downturns. 
• Commercial – These assets have even higher income potential than any residential property typically does, and lease terms are often over much longer terms, increasing income stability. Commercial real estate is the most sensitive to not only real estate market conditions, but also broader economic conditions. Financing and managing these properties often requires a particularly specialized skillset, and knowledge of local markets, zoning laws, tenant needs, etc. 

• In short, way more than you think. Rentals take money to operate properly. We invest with the mentality that we spend our cashflow on property improvements until the property is exceptionally stable. 
• Once the property maintains a high level of stability, allow the cash flow to build your reserves or your “war chest” as we call it. We typically hold a minimum of 6 months of total expenses saved for each of our properties to cover vacancy and surprise repairs. 
• Additionally, we typically will then take the extra cash flow to invest towards acquiring additional properties, snowballing the cashflow exponentially over time. 
• Be sure to invest conservatively, be disciplined in sticking to your criteria in building your portfolio with a sufficient safety net. It is imperative that you prepare adequately so that your real estate business, partners and tenants do not suffer in the event of unforeseen circumstances. 

• We are not a lawyer or anyone’s for that matter. However, we can tell you what we have seen other investors do:
• If you plan on buying with a conventional property loan, investors can hold in a personal land trust. Otherwise, using an LLC is a popular option.
• Many investors hold multiple properties per LLC. As they scale, they modify their corporate structure to include multiple LLC’s.
• Other ways to reduce liability include appropriate insurance policies for rental property, umbrella insurance policies, and business liability policies. We recommend consulting with your attorney to decide what liability options are a good fit for you. 
• Some investors will form their own LLC’s online, directly with their state government websites. This can be cheap and fast, but you may make an error without proper counsel. Investors can also consult 3rd parties online that can set up your LLC and corporate structure for a fee. 

• Compared to owning index funds or bonds, not even remotely. You will need to monitor your business operations, even with a good property manager in place. 
• After you build a good relationship with your management and stabilize your properties, your portfolio will likely be uneventful (which is a good thing). In any case, it is still your responsibility to monitor your monthly statements for unusual expenses, or lower income than expected. 
• Building a strong rental portfolio will take a lot of effort expertise and patience, but the income and returns from a well-managed portfolio can be quite rewarding. 

Again, we are not your accountant, or accountants at all for that matter. We always recommend you consulting YOUR accountant before making any large financial decisions, however we do know that owning rentals can reduce tax bills in the following ways:

• Depreciation – Large items like HVAC, roof, furnace, etc. all have a finite life cycle before needing to be replaced. This cost can be written off and in some cases, accelerated. This can be a substantial deduction for qualified investors. 
• Unrealized gain – Under the right circumstances, equity that remains non-liquidated may not be taxable. Examples of this include appreciation, and organic or forced equity. 
• Debt – A cashed check deposit from a cash-out refinance is, under many circumstances, not a taxable event. 
• Once again, we recommend you consult with your CPA to devise and execute your tax strategy for your portfolio. 

Real Estate is one of many investment vehicles that you can park your money in to hedge against inflation, and grow your money over time. Here are the reasons we chose real estate instead of something like the stock market or crypto currency:

• Control – Real estate is tangible asset, one you can see touch, etc. You decide what renovations to make, what manager to hire, etc. and can have a direct impact on how valuable that asset is, and how much of a return it generates. As opposed to stocks or crypto, which you are beholden to keeping your gaze cast on charts all day long. 
• Returns – Contrary to other investment vehicles, real estate has a unique characteristic in that it makes money in 4 ways. Appreciation, cash flow, tax savings, and debt paydown. 
• Leverage – Real estate allows for leveraging other people’s money, to generate wealth over the long term at a much higher rate. 
• Long term Wealth Creation – Let’s be clear about one thing, real estate is NOT going to make you rich. Yes, real estate is will generate great returns, but in nearly all cases, will require a significant amount of capital to get started with. The ways in which real estate will create the most wealth take YEARS of growth and compounding to be realized.