Choosing an investment property can be an overwhelming process. What is the most important factor when looking for an investment property? Is it the type of property? The location? The price? The property managers at Real Property Management Southern Connecticut have over 25 years of experience, and are here to share their tips for choosing the best investment property.
Choosing What Type of Home to Buy: Multi-Family or Single Family?
First things first, what type of home are you looking for? A single family home is a great place to start for a new investor, but a multi-family home can bring in more income while keeping costs low. Here are some things to consider when deciding between a single family residence (SFR) and multi-family residence (MFR). Your Norwalk property management company can help you find single family and multi-family homes for sale in your area that would make great rental properties.
- Property Cost: The overall cost of a MFR will be higher than an SFR every time, but the per unit cost will be less. Owning 1 MFR with 2 units will end up saving you money over owning 2 SFRs. Your cost to maintain and manage a MFR will be less as the MFR enjoys economies of scale when it comes to repairs and maintenance. Repairing the plumbing or roof on a duplex can be treated as one big job, rather than two smaller jobs on two SFRs.
- Financing: Banks will limit the number of mortgages you can hold, usually capping it at 10. When you purchase a MFR you can take advantage of having two units under one mortgage.
- Vacancy Expenses: A vacancy is one of the top ways property owners lose money. It goes without saying that if your SFR is vacant those costs will come straight out of your pocket. On the other side, if your MFR is partially rented you can offset some or all of the turnover costs with income from the rented unit. It is important to note, however, that vacancies in a SFR happen less often than vacancies in a MFR. Not paying frequent turnover costs like showing, rekeying, and advertising, could save you money in the long run.
- Tenant Quality: Most Norwalk property management companies will tell you that SFR tenants are usually more conscientious about their property than tenants in an MFR. That’s usually because they’re looking for a home rather than just a place to live. When your tenant treats the property as their home, and intend to stay for a while, they tend to take care of it as if it were their own.
- Appreciation: The Norwalk area is a booming housing market and for Norwalk property management, there is ample opportunity to get a good return on your investment. SFRs usually go up in value over time and so the opportunity to make money just by owning a property can be significant.
A lot goes into picking a great location for your investment. When selecting a good rental property Real Property Management Southern CT advises you to look at multiple neighborhoods to find the right investment. When evaluating a property ask questions like, “What is the local culture like?” and “Is this property appealing to long term tenants or short term tenants?”. A good Norwalk property management company will provide demographics for each neighborhood so you know what type of tenant you can expect in the future. For instance, if you are near a university, your tenants may consist mostly of students. Knowing this can help you decide if you want to buy a property that will likely have consistent turnover and students residing in the home. In addition, Real Property Management Southern CT will use resources such as government records and crime statistics in your area to help you avoid making a poor purchase.
What Do Renters Want?
Thinking like a renter, in terms of available amenities, is another important thing to do when looking for an investment property. The expert Norwalk property management team at Real Property Management Southern CT will help you research the schools, public transit, shopping, and job opportunities in your area. Doing a little research on these things will help you know if the location is a worthy investment, as well as help you in future marketing. Stable jobs and quality schools in particular will ensure the property does not lose its value over time.
Find Your Next Property With Help From Norwalk Property Management
Which property is right for you? That depends on your personal goals and situation. Rental property investing requires time and patience, and with a partner like RPM Southern Connecticut you can be sure you are getting great advice for your investment. With over 25 years of experience our property managers are the local experts you need to make your investment a success. If you’re considering buying a rental property call us today for a consultation.