New investor looking for some guidance in SFR

[Raghuram Janakiraman]

Hi, 

I am an out of state investor looking for my first rental investment in Austin. I am looking to buy a SFR in the range 350 - 400K within the suburbs of Hutto, Manor, Pflugerville. Would like to understand how is the rental market in these areas.

1. Would renters prefer single story vs two story homes ? Also, how is the re-sale value for single vs two story homes ?

2. I am currently looking at 3bed/2bath homes at around 1400 - 1700 sqft range. Any suggestions on the size/spec that would be more preferable for renters ?

3. Any other general Do's/Don'ts for rental investment properties which can help in making it favorable for renters. 

4. Any common pitfalls to avoid/factors due to which houses might not get rented soon in these areas ?

I am buying this property only for investment purposes, though there would be a small negative cashflow currently, I am aiming at appreciation with buy & hold.

With the current competition in Austin market, I am looking at buying a new construction home, since it has become very hard to close on a re-sale home due to every house getting 10+ offers and all houses going atleast 10% over list price.

[Vik J.]

1. All other things equal, I’d go for single storey 

2. You hit the sweet spot actually. That said, even a 2100 sq ft would be ok but then the house and corresponding PITI will be bigger and home may negative CF even more

3. Too many to list, depends on where you buy and what kind of upgrades you choose (or the home comes with). Example - in my last 2 purchases, I chose tile and/or wooden for all except bedrooms (which were carpeted). Make sure home has all working appliances and fridge. Allow pets! 

4. I hate to spell out the obvious but competitive rent, even it means you negative CF if finding a tenant asap is your goal. the rental market is great in Austin at the mo but is also equally cut throat as well.

I’m sure you know this already but a lot of builders aren’t selling to investors. That said, there a few - just make sure your realtor is on it.

Good luck on your search and let us know if you need anything. This is a great forum. specifically, neil Narayan, this forum’s legend has been very helpful.