How do single-family real estate investments perform across different market cycles?

In general single-family real estate performs fairly well across all market cycles. In a growing economy with good employment the house prices tend to do well which would raise the value of your investment. Rising employment creates more households that help both home buying and renting. If prices go up rapidly then you will make less money from cash flow and more from appreciation.
Rents go up in inflationary times and act as an inflation hedge. In a soft economy more people tend to rent rather than buy and there is a softening of home price growth- in this scenario, you will see more cash flow and less appreciation. Of course, a major housing crash will diminish the value of your property, which will only affect you if you are looking to sell your property at that time.

Do I get a better return than the stock market? What's the advantage of this type of investment over the stock market?

It’s difficult to compare returns; it depends on the economic environment during time periods. There are periods when one outperforms the other. Real estate is an alternate asset class that does not have a correlation to the stock market. The stock market tends to react to many real-time triggers such as Fed’s comments or the latest unemployment reports or emerging market slowdowns. In addition, automated trading machines make it difficult for the real investor to time market entry and exits. Our clients invest in real estate to diversify from the stock market and balance their risk so that they don’t have all their eggs in one basket.

Are these investments risky?

As with all investments, there is some inherent risk. Just as with investing in the stock market, there are no guarantees. The major risk elements are vacancy, maintenance expenses and trying to sell in a down real estate market. In general, real estate has less volatility than the stock market.

Will my property appreciate?

It is always difficult to predict the future. We use a proprietary forecasting model that looks at employment, historical appreciation, new construction starts and a number of other factors that are neighborhood specific to come up with a Home Appreciation Forecast on all listed properties. In general, higher appreciation properties will be ‘growth’ oriented with lower cash flow while higher yield ‘income’ properties tend to have lower appreciation.

What Does ARV Mean?

A property’s ARV refers to its after repair value. Learning how to accurately calculate a property’s ARV is a skill that even the best investors still strive to perfect. In order to determine whether or not a specific property is a good deal, investors must first, keep in mind the price of the property; second, be able to inspect the property and estimate the cost of repairs; and ultimately, analyze the numbers to verify whether or not the ARV will be greater than the initial cost of the property plus the repairs. If your calculated ARV is not at least 10 percent higher than the property plus repairs, it is likely that your profits will be minimal.

Are There Any Tax Benefits That Come With Investing In Real Estate?

The tax benefits that come with investing in real estate are endless. Becoming a rental property owner however, is arguably the easiest way to receive these benefits; but certainly not the only way. When you rent a property, you can deduct a number of expenses including, but not limited to, depreciation, repairs, interest and taxes that relate to the common property.