Hi All,
I'm finally planning to leave the apartment life behind and purchase a home. I want to get everyone's thoughts in regards to my current plan to purchase a townhouse and renting out the additional rooms.
Properties I'm Looking At:
Currently I'm targeting properties in the Dallas area in the $250K - $350K range that offer three bedrooms and three full size bathrooms. The logic behind this is I should be able to rent out rooms for more money if I can market that they come with a private bathroom.
Also I'm looking at homes that have been built in the last five years. The logic is that I'm not smart enough to know what to look for in houses built in the 80s/90s and would prefer to get a newer one that is modern and won't have any weird quirk I didn't anticipate.
An example of a property that fits the above criteria:
https://www.zillow.com/homedetails/206-Emma-Dr-Lewisville-TX-75057/182382984_zpid/
Loans:
I'm still a little unclear about why a conventional loan is so much better than a FHA. My financial situation is as follows:
- Low six figure job
- $40,000 technically available for a down payment, but I would like to limit the deposit to $20,000 so I have money available for un-anticipated costs.
- Credit score 750-800 range
Given the above information, I think most people would recommend a conventional loan. However, depending on how renting goes for me, I'm thinking I may want to get a second home in a year. If I do, I would need to get the FHA to allow me the liquidity to make the down payment on rental property #2. I see people talk a lot about mortgage insurance, but if I could potentially refinance the house down the road to get rid of it, this may not be an obstacle?
Surrounding Area:
How important is the surrounding area if my intention is to rent rooms out of the house and not to flip? The common thread for most of the properties that fit my above criteria is that the surrounding community isn't exactly the best. In other words, sometimes the house I'm looking at will be valued at $300K, but the house next to me would be valued at $220K, and in one tour I saw a guy with sagging pants come out of their house which gave me pause. So my overall question is what's more important, A+ interior of house but a C- surrounding community, or a C- interior of house and an A+ community?
Type of Property (e.g., duplex, SFH, MFH, Townhouse):
I know the common wisdom around these parts is to get a duplex, but in the Dallas market, there's literally like one duplex for sale in the whole city, plus I don't have access to the capital to get a duplex.
From my research, I feel a townhouse is a good alternative because they give you the ability to partition a house more logically and wouldn't require as much yard upkeep. Am I missing something in not going for a house? The issues I see with houses is much more yard/backyard maintenance potential, bathrooms would have to be shared, typically older so more potential for random house issues.
From what I gathered, if I were to offer a one bedroom with full private bathroom in the Lewisville Texas area, I should be able to get about $800/month for rent. According to Zillow, all my costs associated with the property should add up to $1500-$1600/month for rent. So in a perfect world, two renters covers the mortgage and a third would be $800+ positive monthly income. Please please please confirm if my above situation is laid out appropriately and I'm not overlooking something.
Distance
Interesting wrinkle due to COVID. As I hate commuting, one of my must-haves for the house was a 30~ minute commute. However, my job has converted to WFH, and I'll probably get at least two WFH days when we go back to the office (June 2021?). This being said, I could fairly easily get a job that is full-time WFH if it ever became an issue, so I'm a little more open to stretching the commute out a bit if anyone is familiar with the Dallas area and thinks there's a killer opportunity in a Frisco or a McKinney.
Ongoing Maintenance of the Townhouse
I'm not a handyman, and don't have much interest in being deeply involved in managing the property. Obviously I'll have to be attentive to the renters, but part of the rationale for getting a recently built property without a yard is there shouldn't be as much stuff that malfunctions or requires my time, and if something does, theoretically it should be easy to call a contractor in to get the parts.
I appreciate all feedback.
**Quick sidebar -- I attempted to post in r/realestateinvesting but it kept saying my post didn't contain "get a job". I attempted for about ten minutes to figure out what I was doing wrong but couldn't.
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source https://www.reddit.com/r/RealEstate/comments/kniw20/need_advice_for_rental_strategy_with_townhouse/
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