Tips for Buying Single Family Homes

September 8, 2010 in Getting Started, Investing In Real Estate

 

I personally like single family homes. Everyone needs somewhere to live so there is always a need for this type of housing.  It has been my experience that getting and keeping good long term tenants can be easier in single family homes than in apartments. 

Many folks that live in apartments are living there until they _____ you can just fill in the blanks.  It may be until they have saved up a down payment on a home, until they get out of school, or there may be some other reason. Most of them will move on to a single family home at some point in time whether they rent or buy.

Location, Location, Location

You have heard the phrase location, location, location. The location is absolutely essential when buying property.  The location you choose for rental property may very well be different from the location of your personal home.  I don’t buy higher priced single family homes to use as rentals. It is just too hard to get enough rent out of the home to cover the mortgage payment and all of the other expenses.

When I am looking for single family homes, I look for properties in solid “bread and butter” neighborhoods. These middle class neighborhoods are generally areas that anyone could live in where they would feel safe, the houses and yard are generally well maintained and the residents have a pride of ownership.  You won’t find junk strewn around or cars sitting up on “blocks” in these neighborhoods.  You should drive through areas where you are considering purchasing property at different times of the day. I would also suggest going at different times during the work week as well as on the weekends. This will tell you a great deal about the residents and their habits.

What Do I Look For In A Property?

3 bedroom homes are much easier to rent and command a higher rent than 2 bedroom homes.  Only about 15% of people looking to rent a home at any given time will want a 2 bedroom home. Whenever possible, choose 3 or more bedrooms in the property you are looking to buy.  If there is more than one bathroom this will have great appeal to the potential tenants. Extras like a garage can help seal the deal with people.

Investors seem to have 2 schools of thought when a home has a basement. They either love them or hate them. Some see having a full basement as a great enticement and a way to get a higher rent. Others view them as a place for the tenant to leave all of the items they don’t want to move.  They view this basement as a future job for them – an area to clean out when the tenant moves.

Buying single family homes may be the way you decide to go with your real estate investing career or you may choose a different path. There really is no “right way”. There is only the path that feels right to you. I have a passion for real estate and I hope you find yours!