After the fact - New Investment

[Veeru Rao]

Hi,

I have been wanting to invest in real estate for a while now and finally made a couple of investments back to back recently. They are both townhomes. 

We got a really good mortgage rate on one of them so there is actually some cash flow on that. On the other property, rent doesn't cover the mortgage. However, they pretty much even out in terms of total mortgage payment vs rent. 

While I am excited that I finally invested in real estate, is it a good choice to purchase townhomes in the first place or should I look at investing in a different kind of property for future investments?

I understand townhomes won't appreciate as much as a single family home but our hope is to pay off principal along the way, start getting more cashflow and eventually pay off both properties. 

I just came across this forum and thought I'd post this and get thoughts on if the I made the right move with the purchase of townhomes and what my other options are. 

Thank you!

[Jason Allen]

Townhomes typically have an HOA, which can be pricey and eat cash flow. For future investments, I'd suggest a small multi-family that cash flows. A good rule of thumb for cash flow is the 1% rule. In case you're not familiar, that means each month's rent should equal 1% of the purchase price. For instance, a property you purchase for 200k should produce 2k a month in revenue. There are plenty of deals like this available in the Columbus, Ohio market.