Austin Single Family Investment Homes
As a general rule, the Davis Investment team recommends targeting rental investment properties for under $175,000 for a 3/2/2. For investment reasons, it is also a general rule of ours to place investors as close to the Central core of the Austin as possible when it comes to single family property real estate investments.
Davis Investment justifies this reasoning by maintaining that Central Austin neighborhood real estate has shown the greatest financial appreciation over the years as well as sustained and elevated rents that have proven a success for our investors. Overall homes have the potential for larger equity position through appreciation vs. duplex or four plex investment.
Here are some other tips recommended by the Davis Investment team:
• Locate Property Areas with Few Renters
In order to maintain a good neighborhood quality, there must be a majority of owner occupants who are the stakeholders in the community.
• Smaller Dollar Amount as a Down Payment a Plus
The average person simply does not have the money to go out and buy a shopping center or apartment building. As was discussed before, it is possible to buy a single family home with 10% or less down payment. This means that you can buy a $100,000 house for only $10,000 down. It is entirely feasible for the average person to save $10,000 to buy their first investment property. Single family homes are great for the average Gatlinburg real estate investor.
• Your Investment is More Reliable with Single Family Properties
Most people are not comfortable with shopping centers or apartment buildings. They don’t know what the rents are, what repair costs are, etc. On the other hand, most people do understand single family homes. They probably have seen the value of their own Gatlinburg home go up over the years. They know psychologically that it is a good investment. They know roughly what it costs for repairs. People buy what they are familiar with.
Quality single family home is easier to rent and to sell than any other kind of real estate. As a rule, renters would rather live in a home than in a duplex, triplex, or fourplex. While multiple rental units sell mainly to investors, single family homes sell to homeowners, who vastly outnumber investors. With single family homes, your investment portfolio is scalable and you are able to diversify easier within a community or nationwide.
• Single Family Properties Provide More Financial Flexibility for the InvestorLet's assume that for the same amount of money you could either have 5 houses or 1 apartment building. If you needed money, with the apartment you could either have to sell the whole thing, refinance the whole thing, or bring in a partner on the whole thing. With the 5 houses, you could sell one of them, refinance one, or bring in a partner on just one.
It is comparable to having five $20 bills versus one $100 bill. If you go in to buy coffee at the convenience store with the $100 bill, they might not take it. Like the $100 bill, the apartment building can be harder to get rid of. Houses are more liquid. In most areas single family homes sell in 120 days or less. Apartments can take much longer. More people can afford single family homes and more people want them.
• Financial Control over the Investment is a Benefit
With an apartment building, all of the tenants know each other, and they will know what they pay in rent. That means it is difficult to charge one tenant higher rent than another. Plus, if one tenant plays the stereo too loud or causes other problems, YOU will get the complaints. With houses, they are generally scattered around the area. You can raise the rents individually, offer lower rents to excellent tenants, etc.
• Higher Equity Build Up on your Property Investment
Apartment buildings are valued based on the income approach (how much money they bring in). Single family homes are valued based on comparable sales. This means that your investment houses are valued according to what the other homes in the neighborhood are selling for.
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