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.
Hi Zach, I think your concept works well in the Boise market. It may not be the case in all markets, but I think it works here. I find that home prices on new construction vs. a resale that needs renovations, often times the new construction SFH is the best deal with the fewest headaches and cash out of pocket. Especially if someone is wanting to use a conventional loan, then any updates comes out of their pocket in cash. So to answer your first question, I look for the property to at least break even at the get go. On all of my properties cash flow has grown over time so I know that will happen with one that starts at break even. However, I'm not needing the monthly cash flow to live on, which is not the case for everyone.
2. I do all of these strategies. I have one STR, a few LTRs and have done many mid term rentals when the market had a high demand for them and that's how I got the highest rents.
3. See my first comment. I prefer newer rentals because it's lower cap ex and fewer headaches. I also feel like I get higher quality tenants because those tenants are looking for nicer homes.
4. Specifically in the Boise market, I wish there were more properties with ADU's. Now this might change with the recent zoning changes (I hope)! But it would really help to have more of that product type in our market for house hacking, etc.
5. Yes, remarks tailored toward investors would be great in my opinion because it also appeals to home buyers too.
About your floorplan/finish choices...
1. If the yard are super small, then artificial is best and will definitely appeal most to investors. But I think if it's really small home buyers will like that too because they don't have to waste space storing a mower.
2. I could go either way about the bathrooms. If it's a 3 bedroom layout then I think you only need 2-2.5 baths and a family/bonus room area would be better. For a 2 bedroom place I think the 2 baths is a great idea. In Boise I know 3 beds will sell better than 2 though.
3. This is a nice to have unless it means you could go smaller with this space and have 3 beds instead of 2.
4 & 5. I think this is a great strategy. These mid grade finishes will last longer and be more durable over time. Definitely worth it and it will help them sell/rent faster because they look better than comparable properties on the market.
Sounds like you have a great system going with the in fill properties, I like what you're doing. Keep up the good work. It's awesome that you are looking for feedback and wanting to get better too.
