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. 

[Robert Ellis]

Quote from @David M.:

@Zach Matson

I think while the trend is cash flow, we've had a few long threads about how cash flow isn't quite the way to go for long term wealth generation, and it isn't as nearly easy as "they make it out to be."

With social media, etc, we've had a lot of "new investors" for the past say 5 to 7 years, maybe up to 9, who can say they'd made both cash flow and appreciation...  But, we've had seriously disclocated market conditions in that period.  Historically, this isn't the case.

We don't have free, cheap money anymore, so getting cash flow WITH high leverage isn't going to work.  Sure, some markets it may work.  Sure, if an investor can source a property off market at a great deal thats always good

Remember, "you make your money when you buy, not when you sell."  So, new builds are not normally in my mindset.  New builds have a serious drop in value for those first number of years.  So, it doesn't help my appreciation since I'm automatically taking a hit for those first several years.  Plus, without transactions/movement, tough to appreciate the development.

To me and plus I have a very old market, I tried to stay no older than about 20years.  Towards the end of that timeframe I can find something that that is due for an update and I can put my own quality materials in for the long haul.  Earlier in that timeframe there should be limited issues and I take care of any capital expenditures late.  This takes care of my maintenance issues.

Sounds like you are doing much larger homes/mansions.  It all depends on the market area.  For my market, making like hotel might be nice, but seriously overkill.  Honestly, more things to leak and/or replace.  Might be nice for those wanting to rent by room or something (again, hotel..).  But for long term appreciation / wealth growth, I don't have that sort of vision to really say that people will like to hotel-style living.  Obviously, you can't just have 1 full bath in a multi-bdrm home...

Remember, the point is to be more "neutral," for lack of better terms, with your assets.  I want to appeal to the most number of renters possible to widen my market.

Sorry not more upbeat.  Hope this helps.  Happy to chat.  Good luck.

 where are you buying new builds where their value drops? that's ludicrous. If you buy new builds at the affordable price point and aren't buying on the upper end (buying below the median or around the median), the values don't decrease. In addition if you vet builders a little more you get more upside. We sell new builds at a discounted price per square foot as a direct general contractor and the average new build in our market appreciates by 8.65% per year over the trailing few years. Columbus OH had 10,000 less closings this year but new builds in our market increased by 10% for new deliveries. I'd love to see your support to these claims