Questions for those buying Single Family homes as rentals...

[Zach Matson]

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

[Michael Thach]

Quote from @Zach Matson:

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

1. Important for me is that my SFH rental comps is higher than my mortgage + tax + Insurance. If the rent can not cover those, there is no need to look into it. When I put 20% down, I want that this is covered and cashflow for around 200usd per month on top if possible. If not it's not a dealbreaker however most important is that I need to see that there is 10% appreciation a year in the property. So location is key. I don't want the nicest home in a shady area. I want the ugliest house in the best neighborhood. The heavy lifting is done by other properties, not by me.

2.For long-term I try to stay in the 3bed 2bath and 4bed 3bath range. Looking for stable incomes from families who care about the school, their work and consistency. Looking for median home prices and average american. 

For MTR / STR looking for multifamily or a house which I can room hacked the most, so a large bedroom where I can build a kitchennette is optimal and a en-suite bathroom is what I look for. Should be located closer to CITY Center, or places which attracts tourist, travel nurses or anything which make sense for MTR or STR.

3. Newer homes, usually don't have the backyard done, yours has it, so this is very welcomed. Newer homes are up to date in building codes and usually don't need repairs but the problem with new builds are, usually higher price and locations are less desirable. 

4. It's either very affordable housing in high rent areas for long term rentals. So if the area rent is 2k / month and if I can buy the house for 240k, this would interest me. Hopefully property tax is not crazy. 

If MTR and STR.... I look for floorplans which I easily can convert into 4-5 units with minimal maintance requirement.

5. If you target investors than you should. If your business model is building the products investors want, than of course you need to advertise it towards investors but if you do a middle thing and want normal buyers to buy the property as a backup plan... then it's up to you. 

6. MTR / STR are becoming more popular among investors and society. If builder can build homes which help a family to make a side income, help travelers have more options, increase number of units to fight housing shortage, help investors to make more money with RE than the builder will become succesful. The more problem your property can solve and the more income/ROI your property can generate the better. If you can make an investor happy , you will have endless business. Just focus how you can make an investor money and build your homes around that.

[Zach Matson]

Quote from @Michael Thach:

Quote from @Zach Matson:

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

1. Important for me is that my SFH rental comps is higher than my mortgage + tax + Insurance. If the rent can not cover those, there is no need to look into it. When I put 20% down, I want that this is covered and cashflow for around 200usd per month on top if possible. If not it's not a dealbreaker however most important is that I need to see that there is 10% appreciation a year in the property. So location is key. I don't want the nicest home in a shady area. I want the ugliest house in the best neighborhood. The heavy lifting is done by other properties, not by me.

2.For long-term I try to stay in the 3bed 2bath and 4bed 3bath range. Looking for stable incomes from families who care about the school, their work and consistency. Looking for median home prices and average american. 

For MTR / STR looking for multifamily or a house which I can room hacked the most, so a large bedroom where I can build a kitchennette is optimal and a en-suite bathroom is what I look for. Should be located closer to CITY Center, or places which attracts tourist, travel nurses or anything which make sense for MTR or STR.

3. Newer homes, usually don't have the backyard done, yours has it, so this is very welcomed. Newer homes are up to date in building codes and usually don't need repairs but the problem with new builds are, usually higher price and locations are less desirable. 

4. It's either very affordable housing in high rent areas for long term rentals. So if the area rent is 2k / month and if I can buy the house for 240k, this would interest me. Hopefully property tax is not crazy. 

If MTR and STR.... I look for floorplans which I easily can convert into 4-5 units with minimal maintance requirement.

5. If you target investors than you should. If your business model is building the products investors want, than of course you need to advertise it towards investors but if you do a middle thing and want normal buyers to buy the property as a backup plan... then it's up to you. 

6. MTR / STR are becoming more popular among investors and society. If builder can build homes which help a family to make a side income, help travelers have more options, increase number of units to fight housing shortage, help investors to make more money with RE than the builder will become succesful. The more problem your property can solve and the more income/ROI your property can generate the better. If you can make an investor happy , you will have endless business. Just focus how you can make an investor money and build your homes around that.

 Thanks for the info! I have a bit more analysis and brainstorming to do to make sure they are even more marketable. 

[Bonnie Low]

There's a lot to unpack in your questions but I like that you're giving it a lot of thought. Personally, I am always buying for cash flow. That's usually hard to get with a new build, however, a lot of builders have been offering interest rate buy downs so that makes the new build product a little more (or a lot more) attractive than existing construction in some cases. I do like that new homes won't have major maintenance required for a long time. I find that a lot of new homes are built in neighborhoods that have HOAs. That's a no-go for me. It's just too much hassle, added expense and you never know when they're going to change their rules.

[Zach Matson]

Quote from @Bonnie Low:

There's a lot to unpack in your questions but I like that you're giving it a lot of thought. Personally, I am always buying for cash flow. That's usually hard to get with a new build, however, a lot of builders have been offering interest rate buy downs so that makes the new build product a little more (or a lot more) attractive than existing construction in some cases. I do like that new homes won't have major maintenance required for a long time. I find that a lot of new homes are built in neighborhoods that have HOAs. That's a no-go for me. It's just too much hassle, added expense and you never know when they're going to change their rules.

Yes, most planning and zoning depts require HOA's on new developments/subdivisions. I keep mine as least restrictive as possible, and so far my niche is infill development which is usually just building on land that is already within established neighborhoods with extinct HOAs. It's interesting to hear that perspective though. I've also heard investors that want HOAs as the neighborhoods typically look nicer.

But yes, I think if there is a way to make it cashflow, which is hard on any SFR right now, that's key to attracting investor interest.

[Account Closed]

Hi Zach,

I loved reading your questions because it made me think.  We've never had an opportunity to purchase new construction because I'm usually looking low to mid market for fixer uppers.

There is a lot of value in not needing to do maintenance for 10 years.  I don't know what I'd pay for that comfort but as I get older, the price I'd pay goes up steadily!

I will say ramblers are in high demand here in Monroe, WA as folks age out of goofy split levels and two story homes.  I do love the idea of a dedicated bathroom for each bedroom.

If a builder here offered a pre-sale discount that made the numbers work for me, I'd love new construction.  We're seeing a ton of infill here with some R5 zoning recently updated to R25. 

I think if you came up with a super cost effective duplex or triplex design with fewer bells and whistles and a lower price point, you'd have investors beating down your door.

[Robert Ellis]

Quote from @Bonnie Low:

There's a lot to unpack in your questions but I like that you're giving it a lot of thought. Personally, I am always buying for cash flow. That's usually hard to get with a new build, however, a lot of builders have been offering interest rate buy downs so that makes the new build product a little more (or a lot more) attractive than existing construction in some cases. I do like that new homes won't have major maintenance required for a long time. I find that a lot of new homes are built in neighborhoods that have HOAs. That's a no-go for me. It's just too much hassle, added expense and you never know when they're going to change their rules.

 have you looked at infill lots for new construction? those don't have hoa. what price have you looked at for new builds? do you do underwriting? 

[Zach Matson]

Quote from @Account Closed:

Hi Zach,

I loved reading your questions because it made me think.  We've never had an opportunity to purchase new construction because I'm usually looking low to mid market for fixer uppers.

There is a lot of value in not needing to do maintenance for 10 years.  I don't know what I'd pay for that comfort but as I get older, the price I'd pay goes up steadily!

I will say ramblers are in high demand here in Monroe, WA as folks age out of goofy split levels and two story homes.  I do love the idea of a dedicated bathroom for each bedroom.

If a builder here offered a pre-sale discount that made the numbers work for me, I'd love new construction.  We're seeing a ton of infill here with some R5 zoning recently updated to R25. 

I think if you came up with a super cost effective duplex or triplex design with fewer bells and whistles and a lower price point, you'd have investors beating down your door.

 That actually makes me think I should reach out to some property managers and SF owners and see what their average annual maintenance costs are. I think new construction generally prices out long term rentals, at least with the prices and interest rates where they are at, so I'll focus more on the MT to ST rental market to appease on my single family homes. I also just picked up a townhome development that may make more sense for LT. I like the idea of duplexes and tri-plexes and there haven't been many new construction of those in Boise for quite some time, just due to land costs and the single family market, but it may be a good opportunity to look into that also. 

[Bonnie Low]

Quote from @Robert Ellis:

Quote from @Bonnie Low:

There's a lot to unpack in your questions but I like that you're giving it a lot of thought. Personally, I am always buying for cash flow. That's usually hard to get with a new build, however, a lot of builders have been offering interest rate buy downs so that makes the new build product a little more (or a lot more) attractive than existing construction in some cases. I do like that new homes won't have major maintenance required for a long time. I find that a lot of new homes are built in neighborhoods that have HOAs. That's a no-go for me. It's just too much hassle, added expense and you never know when they're going to change their rules.

 have you looked at infill lots for new construction? those don't have hoa. what price have you looked at for new builds? do you do underwriting? 

I'm not sure if this question was for me Robert. I'm not doing new construction currently but I like your point about infills not being in HOA areas. If builders are still offering rate buy downs on infill projects that could be attractive. My understanding is that they are mostly doing it in areas where they're building at scale.

[Thomas Dent]

you are looking to build new homes to market to investors? Most investors I work with are looking for fixers not so much new builds to rent out. Possibly if its multi family sure. Are you currently working with any agents for feedback on areas or listings. We work with many investors and could possibly help out.

[Zach Matson]

Quote from @Thomas Dent:

you are looking to build new homes to market to investors? Most investors I work with are looking for fixers not so much new builds to rent out. Possibly if its multi family sure. Are you currently working with any agents for feedback on areas or listings. We work with many investors and could possibly help out.

 In a particular development I'm working on I'm wanting to market to investors, yes. Probably more for mid-term or short term rentals. Half of my Infill new builds have been sold to investors, not purposely, but they saw the value as opposed to buying older homes that needed some work. I think in Boise in particular it's somewhat difficult to find any rental that pencils, but new construction allows for getting the highest possible rents without investing additional cash. Obviously with interest rates it's harder for anything to pencil right now as a rental, so I'm curious to see if people have changed their criteria or lowered expectations, or how I can help them make a new build work. I haven't reached out to other agents proactively, but that's a good idea. 

[Robert Ellis]

Quote from @Zach Matson:

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

 I have a 101 page packet I can send you I spent 4 months doing exactly what you are doing with financial data, underwriting, etc and I only sell to investors. this is the Columbus Ohio market. boise is probably good too. we sell them under 300k to investors 4 bed, 3 bath, 2 car garage. 1730 sq ft on a slab. 

[Christie Gahan]

I recently bought a large ( 2,500 sq ft) home.  I did a remodel to create a second unit in the lower level.  It cash flows as two units LTR.  Better with the upper level MTR.  This is the only way to get a house to cash flow in my area.  Unless, you want to throw in an extra $100k just for fun.  I'm not doing a 45% down payment.  It has to cash flow at 20%

I've thought a lot about this. How can we help first time buyers? I would def have a second unit. From the most recent phone calls I've had with mortgage brokers ... a house hack that brings in income does not help new buyers to qualify. If it is an official ADU, new buyers can apply 75% of the rent roll to their income to qualify. Something to consider. I would aim for house with dual master or mother in law suite plus an ADU as long as it doesn't make the sq footage too high.

For a MTR I like a 2/1 or a 1/1.  Under 500 sq ft.  

Feel free to msg me

[Christie Gahan]

Why don't you just build multi family and be done with it ?  

[Becca F.]

@Zach Matson

Really great questions. I considered new builds briefly since they seemed out of my price point. 

1) I had the opportunity to buy a new build in Phoenix area (-$350 cash flow for the first year) which I wish had done if I knew was going to be negative cash flow from all the repair issues (on the renovated home built in 1920 I bought in Indianapolis last year) and just closed on another one, which isn't rented out yet. The Arizona house price points were higher.

2) My strategy is LTR but in my San Francisco Bay Area SFH. I may do MTR for a new tenant who would be roommates with my existing tenants (renting to family members) to get it up to market rate rent. The house is close to hospitals for travel nurses/medical professionals.

3) Yes not having capital expenses for 10 years is factor. Looking back should have gone with a newer home or new build, not a house built in 1920. 

4) Definitely 2 bathrooms for 2 bedrooms - older homes seem to have only 1 bathroom and they're small. Having larger bathrooms and not being crammed into a small space. 

5) Seeing return on investment, historical appreciation (which doesn't necessarily predict future appreciation), rental comps for LTR, MTR and STR so prospective buyers if your market area supports MTR or STR. With MTR and STR maybe estimates of how much it would cost to furnish it, utilities, internet costs.

I like your plan of having a private bathroom with each bedroom. I think it would make it more marketable especially with a roommate situation or a family not having to share bathrooms. What price range are these homes in the up and coming neighborhoods? 

[Alecia Loveless]

@Zach Matson Hi Zach, when I'm looking for SFHs I'm only looking for LTRs. I owned Bed and Breakfasts for 24 years and burned out on the vacation market and will likely never do a STR ever again.

Starting out my portfolio averaged $187/door/month. Now that I’m more experienced in analyzing my deals and figuring out better ways to make them work out better for me over the past 18 months I’ve been able to increase that amount to around $375/door/month.

Cash flow and appreciation are both important to me when I look at a property. Given that I live in a state that has an extremely unfair property tax system property taxes are one of the first things I look at when I start looking at a property.

Hypothetically in my area I could look at two similar $100K properties and one might have property taxes of $1500 and the other might have property taxes of $3900. That’s a $200/month difference in rent needing to be charged to recover the difference!

I don’t have a set preference for the number of rooms or bathrooms but I definitely evaluate the price in accordance with the room & bathroom situation and therefore the amount of rent I will be able to charge.

I would not be likely to ever consider a 4/1 unless it was at a large bargain price because I just don’t think it’s a good setup unless I was planning on somehow adding a 2nd bathroom.

Mostly for me I'm not really interested in 4 bedroom houses or larger because I'd be attracting larger families which is not my forte. I'm more interested in smaller starter homes to help families that are moving to their first SFH or are down sizing.

I find it is useful to know in the initial listing or when I make contact for additional information what work has been done to make less hassle for me in the future. Things like new appliances, new windows, new plumbing, new water heater, new roof, new electrical, new outlets, etc. anything I won’t need to worry about replacing or having to work on after I buy it.

[Zach Matson]

Quote from @Christie Gahan:

Why don't you just build multi family and be done with it ?  

 A LOOOOT of multi-family isn't penciling right now either, with high construction costs and high interest rates, on top of elevated land costs. And, when it comes down to it, we need the housing. Plus, I found a niche that doesn't have a lot of competition and provides great returns when I sell or allows me to keep units after I sell 80-90% of them. 

[Christie Gahan]

You get to keep some of the units?!  Cool!

I realize that you are a builder, but ... will Boise allow manufactured homes?  A one bed / 600 sq ft mobile,in my area, starts at $65k plus moving and set up.  You should be able to do the set up.

rents at $18,000 yr ...... 

[Zach Matson]

Quote from @Christie Gahan:

You get to keep some of the units?!  Cool!

I realize that you are a builder, but ... will Boise allow manufactured homes?  A one bed / 600 sq ft mobile,in my area, starts at $65k plus moving and set up.  You should be able to do the set up.

rents at $18,000 yr ...... 

 Interesting enough there are a ton of older mobile homes sprinkled throughout the city, and in particular in the high growth/redevelopment area I'm pretty excited about. But, the zoning laws are pretty restrictive for bringing in new ones. I would actually like to develop some mobile home parks in the mid-term future, but not really what I'm focused on at the moment. 

[JD Martin]

Quote from @Zach Matson:

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

1. Well it definitely needs to cash flow regardless of whether I'm paying cash or getting a note on it. And I won't buy in an area I don't think is primed for strong appreciation - I don't want cash flow without appreciation. 
2. Long term only for me - I only buy in my little corner of the world. There's no real market for mid or short term here, and I have a STR already that's been more work than any of my LTRs without concurrent increased profitability.
3. Yes, I would take reduced capital expenditures into account since I tend to rehab all of my homes fully on the front end after purchase (roof, wh, kitchens, baths, hvac, plumbing/electrical as needed, etc). Not sure I would pay a premium for it as I have a lot of industry contacts so I don't need to pay retail prices for those things on a rehab.
4. Things I wish I saw more often - usable space that's not yet finished. Unfinished basements, storage areas, things like that can really be money to a savvy investor. Close second would be house plans that allow for easy additions, meaning there's some space on lot setbacks, lots that allow for easy construction access to the backyard, topography is reasonable, additions can be accessed without having to reformulate existing home. 
5. None of that helps. I've done this long enough I can just look at pictures, with the exception that if you've put in higher grade insulation, squeak-free subfloors, kitchen cabinet blocking, things like that I can't see through the walls that would be helpful but normal buyers would wonder what you were talking about.

On your strategies:
1. Artificial grass - since most of our tenants have pets I wouldn't be a big fan. Dogs pissing constantly on fake grass really does leave a smell behind, especially if you're in an area without a lot of rainfall. 
2. Private baths with each bedroom isn't bad so long as they're not creating stupid small bedrooms or taking major closet space away. I would keep these small - sink, toilet, 36" shower or so only. No need to have full bathtubs for everyone. But yes I could definitely see value in that because more bathrooms makes a house easier to rent.
3. Soaking tubs - waste of time in a rental. No one cares about it in my experience, which is generally B class rentals. As long as there's one functional bathtub that's all renters look for or expect. Renters also don't care about huge master bedrooms or bathrooms; as long as they can fit a king size bed in the bedroom that's all they're looking for, and what they usually really want are the biggest closets you can get. The #1 complaint we get on houses of any size is that closets are too small. 
4. Renters want to live in safe neighborhoods, so they're not going to want to rent nice houses in crappy neighborhoods. 
5. LVP floors everyone wants these. Mid-grade appliances, a little less so but renters tend to like side by side or french door fridges. Tankless water heaters and energy efficient HVAC are a waste of money for investors - not only do renters not care, they cost more to purchase and repair. I want a basic, as few moving parts as possible water heating system and house heating/air conditioning system. Renters beat the living hell out of cabinets so I definitely don't want extra money spent on the looks of these things, though better quality boxes and frames is always worthwhile (plywood instead of particleboard, for example). Counter tops is a toss up. Renters love granite and quartz but they also don't take care of anything - my experience in all rental classes - so you have to be willing to accept that renters can damage both of those and they're expensive to replace. 

[Axel Meierhoefer]

Quote from @Bonnie Low:

There's a lot to unpack in your questions but I like that you're giving it a lot of thought. Personally, I am always buying for cash flow. That's usually hard to get with a new build, however, a lot of builders have been offering interest rate buy downs so that makes the new build product a little more (or a lot more) attractive than existing construction in some cases. I do like that new homes won't have major maintenance required for a long time. I find that a lot of new homes are built in neighborhoods that have HOAs. That's a no-go for me. It's just too much hassle, added expense and you never know when they're going to change their rules.

I totally agree on the HOA point. I never buy anything with HOA

[Axel Meierhoefer]

Quote from @Zach Matson:

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

Zach, I have been reading through the comments and understand that most people aim to respond to the questions you posted.

The one thing I believe you probably need to do (and can do better than most non-locals) is a detailed market analysis.

While living in San Francisco till before the start of the pandemic, many many people were talking about Boise. I saw report after report how hot a market it was and how prices shot up. It felt like there was a risk of overbuilding.

I would really analyze that point before building for investors.

For me, as a starting point I still use the 1% rule. If that works the rest of the numbers mostly work as well. The question is if that can be achieved both on the sales price of a finished house and the rent level you can expect consistently. If the house is fine but rent to make the numbers work is too high and the few who try to afford it flake out frequently, it's not good for investors.

So I am sure you know your market and suggest really analyzing how much more inventory it needs for renting in the foreseeable future.

[Nick Trimmer]

Here's a typical "Buy-Box" from an Institutional Investment Firm I know.  Disregard the markets and focus on the other criteria.  Should be helpful!

[Robert Ellis]

Quote from @Nick Trimmer:

Here's a typical "Buy-Box" from an Institutional Investment Firm I know.  Disregard the markets and focus on the other criteria.  Should be helpful!

This is great, anyone you know that does columbus? I spoke to invitation homes who is the largest SFR owner in the nation and they own 14 houses here in columbus but they aren't expanding their portfolio. they love Florida.

[Zach Matson]

Quote from @Axel Meierhoefer:

Quote from @Zach Matson:

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

Zach, I have been reading through the comments and understand that most people aim to respond to the questions you posted.

The one thing I believe you probably need to do (and can do better than most non-locals) is a detailed market analysis.

While living in San Francisco till before the start of the pandemic, many many people were talking about Boise. I saw report after report how hot a market it was and how prices shot up. It felt like there was a risk of overbuilding.

I would really analyze that point before building for investors.

For me, as a starting point I still use the 1% rule. If that works the rest of the numbers mostly work as well. The question is if that can be achieved both on the sales price of a finished house and the rent level you can expect consistently. If the house is fine but rent to make the numbers work is too high and the few who try to afford it flake out frequently, it's not good for investors.

So I am sure you know your market and suggest really analyzing how much more inventory it needs for renting in the foreseeable future.

 I would definitely say that there hasn't been an overbuilding problem in the single family space that I'm in. Possibly in multifamily in the short term, but with interest rates where they've been there haven't been any new deals started, so we may see a short term increase in vacancy rates and lower rents, before being massively undersupplied in the mid-term. For over a decade we've had vacancy rates in the 1-2% range before increasing the past year or so to around I believe 5% now. 

But as far as my niche, in single family infill... we still have a lack of supply. There are definitely buyers sitting on the sidelines due to high prices and high interest rates. 

You're right about Boise being a hot market...really in the top 5 from 2013 to 2021 consistently as far as price increases and population growth, as well as ranked places to live. We have dipped since mid 2021 in prices because many locals have been priced out of new homes. And, the 1% rule hasn't really been a thing here since probably 2015 or so, and even then it was hard to find. It's physically impossible to build to the 1% rule right now and for the past several years, unless someone is doing MT or ST rentals. 

I know that in general we need the housing in the single family space. But it's definitely good to hear from people how they analyze their plans for rentals. I guess in comparing to what my buyers have already been , to what people have been saying in here... most of my buyers have been using my new builds for ST or rent by the room and finding cash flow that way. I do have some townhomes I'll be building coming up that may make more sense for LT rentals so this is a good start to see what I can make work.

[Axel Meierhoefer]

Quote from @Zach Matson:

Quote from @Axel Meierhoefer:

Quote from @Zach Matson:

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

Zach, I have been reading through the comments and understand that most people aim to respond to the questions you posted.

The one thing I believe you probably need to do (and can do better than most non-locals) is a detailed market analysis.

While living in San Francisco till before the start of the pandemic, many many people were talking about Boise. I saw report after report how hot a market it was and how prices shot up. It felt like there was a risk of overbuilding.

I would really analyze that point before building for investors.

For me, as a starting point I still use the 1% rule. If that works the rest of the numbers mostly work as well. The question is if that can be achieved both on the sales price of a finished house and the rent level you can expect consistently. If the house is fine but rent to make the numbers work is too high and the few who try to afford it flake out frequently, it's not good for investors.

So I am sure you know your market and suggest really analyzing how much more inventory it needs for renting in the foreseeable future.

 I would definitely say that there hasn't been an overbuilding problem in the single family space that I'm in. Possibly in multifamily in the short term, but with interest rates where they've been there haven't been any new deals started, so we may see a short term increase in vacancy rates and lower rents, before being massively undersupplied in the mid-term. For over a decade we've had vacancy rates in the 1-2% range before increasing the past year or so to around I believe 5% now. 

But as far as my niche, in single family infill... we still have a lack of supply. There are definitely buyers sitting on the sidelines due to high prices and high interest rates. 

You're right about Boise being a hot market...really in the top 5 from 2013 to 2021 consistently as far as price increases and population growth, as well as ranked places to live. We have dipped since mid 2021 in prices because many locals have been priced out of new homes. And, the 1% rule hasn't really been a thing here since probably 2015 or so, and even then it was hard to find. It's physically impossible to build to the 1% rule right now and for the past several years, unless someone is doing MT or ST rentals. 

I know that in general we need the housing in the single family space. But it's definitely good to hear from people how they analyze their plans for rentals. I guess in comparing to what my buyers have already been , to what people have been saying in here... most of my buyers have been using my new builds for ST or rent by the room and finding cash flow that way. I do have some townhomes I'll be building coming up that may make more sense for LT rentals so this is a good start to see what I can make work.

 One way to  play this market as a builder could be to have the purchase secured before yuo start building a property. You could buy the infill-lot and offer a few different building plans to investors. if anybody likes the deal, they can sign a purchase contract with a realistic completion data. That way it will be up to them if they want to play on possible future appreciation, LT, MT or LT. Yoo would have a dependable profit margin.

That's not an max-approach but a sound business strategy. If ever a property ultimately gets finished and the investors want to get rid of it upon completion you could have a first right of refusal in your contract.

This concept stems from the "Social farming community". The idea is for farmers (mostly organic) who don't want to produce at an industrial scale but focus on healthy food. They decided to offer an annual membership where the members request what they would like to get for their membership funds. In a meeting the list of crops is decided for the year, the farmers do all the planting, care and harvesting and each months when the season starts the members get a basket of fresh organic fruit and veg. They pay each month, the farmers have a dependable income and can calculate exactly how to operate the farm and have profit to pay themselves and the community can grow over time. I have ti see work great in Europe. Because the farmers know their land, the local climate and grow a very diverse crop, they will never get wiped out like the mono-crop industrial guys when there is bad weather or droughts or things like that.

I am sharing this because I believe creative approaches can make you successful in a field that most people believe has only one way to operate successfully.