Trustworthy investment partners are key to building wealth, according to Zmistowski. "If you're looking for steady cash, not the big hit -- like a pharmaceutical firm that comes up with a cure for cancer -- you can earn 7 percent annually, paid on a quarterly basis," Zmistowski said. "By the end of the five-year term, you've reached your investment goal without the headaches that often come with residential real estate rental properties."
Zmistowski sees small strip malls that do not require an anchor store as prime real estate rental investment opportunities for a select clientele seeking to build discretionary income for future expenditures, such as gifts for grandchildren or a cruise. "I currently have three commercial strip mall investment rental properties," he said. "The first one had cash flowing right away, but each one of them is a little bit different."
Zmistowski acknowledged that investing in a storefront rental in a small strip mall may not be for everybody. "This is not a securitized or advertised investment venture," he said. “[But] some of my clients have been with me for 25 years, so I know their situation, needs and risk intolerance. This is a less management-intensive real estate investment."
But not all financial advisors steer clear of residential property investments. Charles E. Donalies, CFP and president of his eponymous company, Donalies Financial Planning LLC of Washington, D.C., is not adverse to investing in residential rental properties. He looks for certain bellwethers when seeking out potential investment properties in a town where such homes are few and far between.
"I look to see whether millennials are moving in, if there's accessible (public) transportation, or if there are plans for development of commercial properties," Donalies said. "There might be plans five years away, but as long as those projects aren't going to be derailed, we can wait for them."
Donalies said that grocery stores or a Wal-Mart coming in are a big draw for people. So are bars and restaurants because they are where young people hang out on weekends. "Property values go up very quickly [after construction begins on these projects]," Donalies said. "I'm not someone that does a quick flip. If you're going to make any money, you have to get in while prices are low."
One of the most important assets to look for in a potential investment rental property is on-site parking, Donalies said. "If you can buy an investment place with parking, that makes it even more attractive to potential tenants," he said.
In scouting out potential rental investment opportunities in the nation's capital, Donalies said there are some neighborhoods he no longer views as a good investment. "I would not include Georgetown as an area ripe for investment opportunity because the properties are so expensive, even if you purchase a (flipper), and the rents are so high," Donalies said. "I think you have to look to upcoming areas such as the Southwest Waterfront, [and] parts of Northeast D.C., such as Ivy City."
For ambitious investors not afraid to get their hands dirty, Donalies said there are still deals to be had in Southeast D.C., which he said has long been a neglected part of the city. "But that's changing, (too)," he added.