Which types of real estate make the best investments?

By
Real Estate Agent with Keller Williams Realty Inc. TREC# 595370

Step-by-Step guide to buying an Investment Home in Austin Texas

This blog is the third part of a multi-part blog about buying an investment home in Austin. It is broken down into several different articles for ease of reading. This series is going to concentrate on investing in one-four family houses with an investment strategy of buy, hold, and rent. This is not a blog about flipping homes.

Why should I purchase an investment home in Austin?

Investment Real Estate vs Stocks

Which types of real estate make the best investments and why?

What is a property manager? Do I need one?

Which areas of Austin offer the best investments?

Learn the lingo of real estate investing

How to properly analyze if an investment home is a good investment

What is a 1031 Exchange, and how can it help me to succeed?

Asset Types

In residential real estate investing, there are two types of assets – Single family, and Multifamily. Each offers a number of advantages and disadvantages.

Single Family

This is by far the most common type of residential investing, and what most novice investors decide to buy. Single family homes offer a lot of advantages over multi-family homes. Single-family homes have a perception of being more desirable than a multi-family home. They tend to be located in better neighborhoods, have better schools, be more affordable, and also tend to attract a premium tenant. People that are attracted to a single-family rental are frequently the kind of people that want to try out a neighborhood then buy in a year or two.

However, there is one major disadvantage to owning single-family homes for investment. When a tenant vacates, there will be a period where the home is not rented. Your REALTOR©’s or property manager’s job is to quickly get a quality tenant in there.

Multi-Family

Multi-family is a broad term that describes housing that contains greater than one unit. For the purposes of this series, we are only going to talk about duplexes, triplexes, and fourplexes. Multi-family housing can come in a wide range of flavors, ranging from the apartment style to the townhome style.

I have seen town-home style duplexes where each side is a 3/3.5 or 3/3 where the rentals tend to go for $1,350 a month or more! These duplexes tend to feel more like a home rather than an apartment. 

Multi-family housing that is built in a townhome style is in my opinion one of the smartest investments anyone can make in real estate. I believe this because a duplex built like this offers the main advantages of single-family housing and offer the advantage of redundancy. If one tenant moves out, there is most likely another paying rent! This is also an attractive option for someone who wishes to owner occupy one side of the building and rent the other.

The primary disadvantage of multi-family housing is that duplexes and fourplexes that are desirable tend to be much more expensive than single family housing.

About Jordan Gouger

Jordan Gouger is a buyer’s agent with Keller Williams Realty’s South West Austin Market Center. He specializes in working with first time home buyers and buyers of residential investment properties. Among his areas of expertise are South Austin, Gracywoods, Quail Creek, North Central Austin, and Scofield.

 

Jordan places customer service above anything else and always goes the extra mile to help his clients achieve their real estate goals. He has experience working with out of town buyers and is able to help coordinate everything locally to ease your peace of mind. For all of your buying needs, please contact him at 512-693-9297 or jordan.gouger@kw.com

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Winston Heverly 06/17/2014 10:54 PM
Topic:
Home Buying
Location:
Texas Travis County Austin
Tags:
duplex
multifamily investing
fourplex
single family investing

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Rainmaker
1,206,569
Wayne and Jean Marie Zuhl
Hallmark Realtors - Clark, NJ
The Last Names You'll Ever Need in Real Estate

Jordan,

This is a great post filled with lots of excellent resources and info.  Thank you for posting it.

Jan 02, 2014 12:21 AM #1
Rainer
46,635
Jordan Gouger
Keller Williams Realty Inc. - Austin, TX
Helping you to achieve your housing goals!

Wayne & Jean - Thank you! I am working on building a complete guide about investing in Austin. If you are able to, please read the other portions of this series that are completed. 

Jan 02, 2014 12:30 AM #2
Rainmaker
1,110,491
Jane Peters
Home Jane Realty - Los Angeles, CA
Connecting you to the L.A. real estate market

This is a good overview of some of the different types of investment properties. There are often buyers who look at condos which are not as good an investment as the two kinds you mention, especially since there are homeowners dues to be paid and you are at the mercy of the board.

Mar 09, 2014 11:07 AM #3
Rainmaker
1,582,085
Patricia Feager
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

Jordan,

You've provided excellent information and I like how you utilized links for easy reading. This is a topic many people are interested in and you covered the information like a true pro!

Mar 11, 2014 06:43 AM #4
Rainer
46,635
Jordan Gouger
Keller Williams Realty Inc. - Austin, TX
Helping you to achieve your housing goals!

Jane - Thank you! Yes, I too have seen a lot of people that consider condos for investment properties. In some places it works, in others not so much. We have a lot of students (50,000+) that live here throughout the year and they prefer to live close to campus. Condos that are near The University of Texas tend to command a premium rent because of this and the rent premium is high enough to justify the increased HOA fees.

Patricia - Thank you! This blog series barely scratches the surface of this topic. If you would like more information, there is a great blog devoted to this topic and nothing else available here: http://www.investfourmore.com/

Mar 11, 2014 09:39 PM #5
Rainer
420,125
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Real estate investments offer the best return on cash than any other instrument but opportunity capital and cash reserves are essential to get started. Once attained, the next step is, as you outlined, getting a Realtor with knowledge and experience as a first step and meeting with a tax adviser or CPA to formulate a plan.

Mar 13, 2014 02:49 AM #6
Rainmaker
1,427,988
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I wrote a guide for Investors and it has brought me a lot of business.  Mine was more general and not as locally focused.

Mar 13, 2014 05:53 AM #7
Rainmaker
1,033,759
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Jordan,  This is a great introduction into investment properties.  Your links provide answers to many FAQs.  Congratulations on the feature!

Mar 13, 2014 07:18 AM #8
Rainer
46,635
Jordan Gouger
Keller Williams Realty Inc. - Austin, TX
Helping you to achieve your housing goals!

Kimo - Yes, I absolutely agree with you, but in the long run. Real estate investing is an investment vehicle that requires a multi-year commitment in order to realize gains. This style of real estate investing is really intended for someone who wants to achieve wealth slowly. Having a tax advisor as part of an investment team is a great idea because they can help the investor to maximize their deductions. Actually, that would make for a great blog topic. Thank you for the idea! Also, I really like the name of your company!

Gene - Thanks for the comment. I hope this will as well  Although intended for someone investing in Austin, there are many concepts covered in this series that can be applied to any market.

Sharon - Thank you! I hope to significantly expand this topic over the course of the year as being committed to blogging is one of my goals this year. 

 

Mar 13, 2014 11:19 AM #9
Rainmaker
430,146
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

Jordan- what a great guide for investors in your area!

Mar 20, 2014 01:30 AM #10
Rainer
46,635
Jordan Gouger
Keller Williams Realty Inc. - Austin, TX
Helping you to achieve your housing goals!

Shanna - Thank you!

Mar 20, 2014 02:21 AM #11
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Rainer
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Jordan Gouger

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