Buying an investment property

[Jrpbabe2003]

My husband and I are looking to buy a house/townhouse that we can live in for a few years and rent out once we have paid it off, or close to paid off. My question is: Is it better to buy a small and cheap town-home or a larger, more expensive "family" sized home? Which would have more appeal to the renting public?

As far as numbers go, it would be about $50,000 more to buy a home and we would rent it for about $300- $500 more a month. I just want something that will be easy to find quality renters for.

Any advice if very welcome! I know everyone on these boards are so knowledgeable.

 

[lastminutemom]

First, be sure to buy something that you would want to live in for a long time in case your personal economy changes.

Second, many condo/townhome complexes have caps on the percantages of units that can be rented. So, if the cap is 25 percent and you are ready to move, but there are already 25 percent of the units rented out, you can rent. You are stuck.

Third, in my community single family homes sell much faster and easier and thus if you change your mind about being a landlord. (or if your personal economy changes) you have a better shot at selling it.

Finally, the best that you can judge this far ahead of your plans to rent, you want your home to be one of the only rental properties in the neighborhood. Single family home or not, if the whole neighborhood is (or turns) rental you will lose value fairly quickly.

Good luck.

 

[Jrpbabe2003]

You brought up great points! We were set on town-homes, but I will now look at homes! Thanks!

 

[prncess674]

There are plenty of things to consider other than size. If you are going to go for a bigger "family" sized home be sure you are aware of the schools. It can be the biggest best "family" home but it is in a school district with a poor reputation most families will X it off the list.

If it is a more modest townhome that may appeal to couples then look for the convenience of public transporation, nightlife, bars, restaurants, etc.

 

[Jrpbabe2003]

Very true. I am looking in the same neighborhood for both the house and the townhouse. It has great schools and close to sooo much (it is the neighborhood we rent in now). I am not sure about public transportation and it is a suburb, so not much as far as nightlife. Looks like houses are looking better and better

 

[eliza61]

Very true. I am looking in the same neighborhood for both the house and the townhouse. It has great schools and close to sooo much (it is the neighborhood we rent in now). I am not sure about public transportation and it is a suburb, so not much as far as nightlife. Looks like houses are looking better and better

some other thoughts on landlording (I'm one and it's a love hate relationship)

1) what will you do if your property does not rent? Are you ready for the cash outlay?

2) Do you have a game plan for when you get those "not so quality" tenants? I an other dissers could probably give you the "renters from hell" horror stories.

Good luck,

 

[akcire]

As a landlord, I never want to rent out either a townhouse or a single family home. I want at a minimum a 3 flat. The #1 reason, people lie! If I rent out a 3 flat, I can safely assume I will get one quality tenant. That quality tenant will tell me about all the stuff going on in the other apartments I would be unhappy about such as: illegal drug dealing, meth house, extra people living in the apartment (say you rent to 3 and 8 are living there), pets outside of the lease terms, etc.

When I look at a property I look for things that will have the lowest long term maintenance costs. For example, I love brick buildings and a really love those buildings to have exposed brick stairwells (tenants move in or out have a hard time damaging brick---drywall will have to be touched up with every tenant). I don't want anything fancy or that requires special care. Tenants don't know or generally care about your granite counter tops that need a special cleaner or that you should not mop your hardwoods with buckets of water. If only stainless steel walls and floor drains would come in fashion--then a few of my tenants might even clean. In one apartment my husband and I visited for our annual inspection we determined hog slats in the floor would have been best for this tenants cleaning style.

If I had to pick between what you offered, I would choose townhouse. The rent is going to be lower--therefore a greater number of people who can afford the property which in turn allows me to be more choosey. Not all tenants are bad, we have had some wonderful tenants (I just sold a 3 flat to one of the long term renters) at the same time we have had some real "winners".

Feel free to ask any questions, we have been successful (in that we make money) landlords for a long time.