Best Strategy To Invest in Rental Property in Frisco TX – Part 1
In the previous post, I highlighted several questions to ask yourself if you have been thinking about adding real estate to your investment portfolio. Let look at the first point in my previous post.
What type of Real Estate Investment is Right for YOU!
Real Estate is a general term. It covers a lot of different types. It can range from commercial office building, warehouses, retail building to land and residential. What is right for you? Here are some questions to ask yourself:
What do you know about commercial vs residential real estate?
Are you a commercial real estate or a residential kinda guy/gal? How much do you know about each of those? Do you have any experiences with them? For the blog post purposes, we are focusing on residential property. Although we can do commercial deals, we are more experienced in residential. Our 10+ years experiences have been in the residential side.
How much capital do you have to invest?
How do you plan to get the capital to invest? Are you planning to borrow to get the capital? If you are, do you have a plan on how to pay them back? Do you have a budget or know what number works for you to make a profit?
What are you planning to do with the property? Are you wanting to flip the property and make some quick cash or are you wanting to have a monthly cash flow?
Are you going to flip the property or are you wanting to use it to generate cash flow? If you are flipping, you need to detach your emotional side of the property and put more numbers into the equation when making decision on what you need to do to get the property ready so you can sell it. You also need to know what are the rules for flipping a property when it comes to lenders.
If you are going to use it to generate cash flow, you also need to look at numbers but also need to put a little emotion into the property from the tenant’s perspective. What are the rentals look like out there? Do they have new carpets, granite counter tops, how does the floor plan look like,what type of flooring….etc. You want a property that your tenant will want to be there long term.
For rental properties, you want to make sure that you have a lower turnover, meaning the longer the tenant lives there the better. Each time you have a turnaround, you have expense to clean up the property, possibly painting, re-listing the property which means you will be paying rental commission, you may have vacany for a month or two which equates to no income for those months. The longer they stay, the better.
Continue on to the next post to read about what does it take to be a landlord.
Call us at 214-529-6003 if you have any questions after reading this. We would be glad to chat with you and answer any questions that you may have.