Don't Make A "Big" Investment Mistake

As a landlord here in Brevard County Florida, over the past 14 years I have had my fair share of ups and downs.  And, I've made mistakes and learned from those mistakes. 

Often, we have people call us with an interest in investing in real estate.  Real estate investing isn't for everyone.  Some people don't have the disposition to be a landlord.  If it were easy, everyone would be doing it.  

The first property we bought was in 1996, a 1700 square foot home, 4 bedroom, 2 bath.  We kept it rented for 10 years, with the same tenant for 8 years.  But, as property values increased, so did the taxes and insurance.

We sold it, took the money and replaced it with 2 smaller properties.  Houses about half that size.

That house was too big.  We buy smaller houses now.  

We have found that typically, smaller houses rent for more money per square foot than larger houses.

Since the rent tends to be more affordable, there is a more abundant supply of tenants available for smaller houses.

Tenants have a tendency to stay longer in smaller houses, because of the affordability, versus larger more expensive ones.

The mortgage payment, taxes, and insurance are typically less in smaller, well appointed homes.  So, when there is a vacancy, the landlord's holding costs are less.

A small house accomodates less people, than a larger one, so typically there is less wear and tear.

The upkeep, repairs, and maintenance are typically less.  And, when a tenant moves out of a smaller property, typically there aren't as many rooms to paint, or as much cleaning to do as on a larger house.

Be careful, in choosing a property don't go too small, or compromise on the area.  Always buy in an area of well cared for homes.  Otherwise, the landlord may wind up dealing with tenants that can make them wish they never got into the rental business.

Smaller houses typically sell for more money per square foot than larger houses. And, they sell more quickly than larger houses, as there is a larger pool of buyers, including other investors, in the lower price ranges.

In a market downturn, such as the one we've had in Brevard County a smaller house's value will not be as severely affected as a larger house's value.

For us, we have found that smaller houses, in clean neighborhoods with good schools are a better rental investment option than larger houese.

 

In writing this article, please remember, I live and work in the Melbourne/Palm Bay area of Brevard County Florida.  I am speaking from my experiences in this area.  This information may vary in different parts of the nation.