Need advise: New Town home vs Single Family

[Krishna Kiran]

Hello all,

I am totally new to this, this is my first post here and need some help from all the wise people. I am a federal employee and my wife is going to be a dentist soon, I am not in the market for investment right away but it is in my mind for sure in next couple of years as my wife starts earning. For now, I own a town home in Chicago which is rented and which we do not plan to sell for at least couple of years.

I am planning to move to Houston by sept of next year. I am confused between buying a townhome for 285k or buy a single family for about 345k. If we buy a TH, we might stay in it for two to three years and then move to bigger house, if we buy a single family, we will stay in the house for five or six years in it and then move to another house. We wont be selling either way, plan is to rent when we move to our next home. Also, which location is best for living now and renting in like three four years, Sienna, Spring or Fulshear. As for the Chicago town home, plan is to rent for next three years and then sell it and buy another investment property in Houston.

Sorry, if I am all over the place but, any guidance would be highly appreciated, my main concern in buying single family for 345k is renting scope after we move to another house..  Whatever we buy, we are looking in Sienna or Fulshear. Would love Sugar land but could not find any that we like with in the Price range. 

[Robert Haney]

There are 3 ways to make money in RE.  

1. Positive cash flow rental income.  

2.  Price Appreciation 

3. Both 1 & 2 above.

I like #3 above.   All my buy-and-holds made nice rental money on day one per #1 above.  All of them were also saleable on day one for a profit without any appreciation (could be flipped for a profit).   All have appreciated too per #2.  

Buying RE for #2 only is called speculation.  Speculation is just gambling.  Why gamble when you can you can make a profit immediately with smart investments?

Buying a $345k property in Ft. Bend county to turn into a rental later is speculation #2 above.  It will not cash flow if you have a mortgage.  This is a very poor RE path compared to sure investments.

If you sacrifice and buy 2 properties less than $200k, live in one and rent the other for a couple of years, then move and rent the one you were living in - you'll have 2 money makers instead of one money loser.  Then you'll actually be a RE investor on his way to success.

[Sarah Brown]

Comes down to cashflow. Which will cashflow better? A lot of townhomes have high HOA dues, which makes it harder to cash flow it without putting more down. Some CC&R's for townhomes (at least my area) have a limit how many units can be rentals in the complex. How much will you put down in each scenario?

[Krishna Kiran]

Thanks for the advise!! I am little skeptical with the SFH and renting it out, I was leaning more towards a smaller townhome and try to keep the costs down. My down payment is about 20% either way (TH or SFH)

[John Warren]

@Krishna Kiran I would do the single family home all day long. Most of the time the town home HOA will make the price difference irrelevant from a monthly affordability perspective.

[Jonathan Klemm]

@Krishna Kiran - Single-family definitely from an investment standpoint.

Resale value and market time will likely always be higher and faster with SFR.

Also, HOA is a cash flow killer. My recommendation is to stay away from townhomes.

[Krishna Kiran]

SFH in communities I am looking has HOA as well, it is 70$, for TH it is 100$. Nicer communities these days almost always need some HOA dues at least.

[Velia Melissa]

There a some home with no HOA just gotta do some digging