Single Family Home Investing In Houston, Texas

I am going to give you my experience. I have owned both Multi-Family and single Family investing properties here in the Houston area and I have learned a lot of things along the way. I’ve learned some things to do and not to do.

First thing I will tell you is, if you are going to start buying properties whether it is single family or muti-family or apartments or trailers, whatever it is you want to make sure that you are very focused. I come across a lot of people who tell me they want to do everything. They are not specialized, they are not focused and they end up not doing any of them very good. So, if you are going to focus on single family homes I suggest you make that your core business model. And, you want to try and make sure that you are not doing a bunch of different things and trying to run them all. There is plenty of time to learn everything, you just want to make sure that the thing that you practice at that time, you know very well.

When you are buying investment properties, you want to make sure that you are looking at the five things that go along with investment properties. Most people just always think it is just the cash flow and that is a big part of it, but that’s not the only part. When you are looking at investment properties you want to look at all the things. I always say it is kind of like a five legged stool.

The first thing is obviously the Cash Flow, that is a given. The second thing is you are going to be able to depreciate the taxes on that property. Single family homes are depreciated in about 27 and a half years over the life of the mortgage. And you are able to depreciate that and you want to talk to your accountant about being able to depreciate your properties.

Next thing is when you purchase the property chances are you are going to capture some equity in the property. So you want to look at the equity capture that you are going to gain right at acquisition time. The fourth thing is that someone will be paying down that mortgage for you. So, for instance, if you own that property for twenty years, if you are on a twenty year mortgage, that mortgage will be down to zero. So, somebody will buy that house for you and pay that mortgage. And the fifth thing obviously is appreciation, the house will be worth more twenty years from now than when you bought it today.

You want to think about all five things when you are buying an investment property. It’s not just cash flow like a lot of people think. I have some investors that they buy purely on speculation and they will buy the properties and five years from now it is going to be worth $100,000 more than I bought it for today and that’s what I’m going for, I’m not going for the cash flow. And everybody just has a different plan. And, what I mean by having a different plan is you want to have a business plan. You want to have it written down and you want to follow it. You want to make sure that you stick to your plan and re assess your plan all the time if you want to have a certain percentage return every year. Or, you want to have a certain amount of speculation in growth. You want to make sure that whatever that plan is you want to stick to that plan. And you want to make sure that if you are going to self-manage you want to know tenant screening, you want to know evictions you want to know property code and repair costs to fix something.

If you hire a property manager you want to make sure that they know those things. You want to make sure that whoever you are partnering with, whether it is a property manager, just a real estate agent or something like that, they know what they are doing. And they have a business model and your business model aligns with theirs.