Rental investment property

[Olu Oguntoyinbo]

Hi guys, I’m looking to buy first investment property in the Houston Texas area. I want to rent it out but I’m conflicted on the type of single family home and price budget I should go for. I’m going with the cash flow route more over the equity appreciation now. How much cash flow should I take minimum? Any advice on this please ?

[Andrew Postell]

@Olu Oguntoyinbo thanks for the post.  Always great to hear from someone purchasing in Texas.  

Now, what is the "right" property to purchase?  This is always open for debate but generally speaking buying a 3br 2ba home that is BELOW the median price point on a single family home is a good place to start.  This is where the majority of the working class renters will choose a property.   And because more people are competing for homes in that range, the rent % is better.  Actually, the LOWER the value the better the % of rent becomes.  Meaning, two $250k homes will rent better than one $500k home.  So, would a $50k home rent even better?  Yes...but now your renter is a little different and lending gets a little harder.  So, somewhere below that median price point will work well...but not too far below.  If you are targeting 2-4 unit properties just treat each unit in that one single family home price point.  So, a $500 duplex is great.  A $1million duplex isn't great.

Absolutely lean on your realtor for guidance in this area.  

Hope all of that makes sense.  Thanks!