Hey guys. Newbie here. I'm thinking of buying my first rental property but I'm having trouble deciding to go with a townhouse or a single family home. I haven't looked into complexes yet, but want to start with at least 1 property to see if this is for me. I have around 50k to start so that should get me something around 250k.
I've read a lot of the articles on here, and know the importance of cash flow. Any advice/anecdotes would be appreciated. Thanks!
Rental Property Investor · Cincinnati, OH · Member since 2020 · 380 posts · 588 votes
5y
@Jason Bentz I view the 1% rule as a baseline on deals. It is a great figure to calculate, but sometimes you have to go with what your gut says. If you're unsure of a deal you can always put it on BiggerPockets and let other users chime in. Also, what is the ROI long term? Do you plan on holding on this to for a few years, ten years, 30 years?
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
5y
@Jason Bentz the answer is... it depends. Many townhomes have HOA charges. But, some single families do too. In general you'll have less flexibility to do any value-add to a townhome because the footprint is fixed. Run numbers on both.
Rental Property Investor · Cincinnati, OH · Member since 2020 · 380 posts · 588 votes
5y
@Jason Bentz Adding to what @Nicholas L. said, you need to find the right investment property that makes sense for you. I wouldn't hone in on one or the other, instead let your Realtor know you are interested in both. Once you have some options and are ready to make a bid then run the numbers and see what investment is going to give you the best cash flow.
Thank you both for the responses. I'm in the ATL market, and something around here is usually 250k but only rents out for at most 1500 a month. I'm not sure how much I should stick to the 1% rule, but this definitely comes up short. What are your thoughts there? @Tanvir Sattar@Nicholas L.
Rental Property Investor · Cincinnati, OH · Member since 2020 · 380 posts · 588 votes
5y
@Jason Bentz I view the 1% rule as a baseline on deals. It is a great figure to calculate, but sometimes you have to go with what your gut says. If you're unsure of a deal you can always put it on BiggerPockets and let other users chime in. Also, what is the ROI long term? Do you plan on holding on this to for a few years, ten years, 30 years?