The age-old question persists: financially speaking, is multi-family or single-family the better investment path? That’s similar to comparing a hammer to a screwdriver. The honest answer is… it depends. It depends on your specific goals, available resources, and what you’re aiming to accomplish. If you’ve done your research and decided that single-family properties align with your investment strategy, here are 4 essential tips for investing in single-family properties in Lubbock that we at Electrum Properties have found valuable.
Embrace the Lead Funnel Approach
Among all the tips for investing in single-family properties in Lubbock, this one gets overlooked most frequently. Too many investors limit themselves by considering too few properties before making a purchase decision.
Think of the process as a funnel, with numerous properties entering at the top and only a select few emerging at the bottom. This means you should evaluate and analyze many potential properties – what we call “leads” at this stage – before identifying the one that offers the best investment value for your specific situation.
Additionally, generating multiple leads and making various experimental offers builds your experience. The more you practice, the more skilled you become. Ultimately, you’ll develop into a more effective investor who achieves better financial outcomes and creates win-win situations for everyone involved.
Run the Numbers Carefully
After narrowing down your options to a handful of promising properties, it’s crucial to analyze the financials thoroughly. You must determine whether these properties will serve as solid investments that advance you toward your financial goals within your planned timeframe.
Will the cash flow remain sufficient after mortgage payments to cover all additional expenses? Simply subtracting the mortgage payment from the monthly rent doesn’t reveal your actual profit margin. You’ll need to account for taxes, insurance, maintenance, and unexpected repairs.
By incorporating all these expenses into your calculations, you can accurately determine whether the property will generate profit and provide adequate cash flow. If the numbers align, you’ve likely found a property that will serve as a sound investment and help solve real estate problems for both parties.
Commit to Research and Strategic Planning
With multi-family properties like apartment complexes, most rental units share similar characteristics. Your research typically applies to the entire building. Single-family properties, however, present much greater variety and require individualized attention.
Each property differs in layout, location, history, landscaping, pet policies, and numerous other aspects. These differences also necessitate tailored approaches to leasing contracts. Be prepared to conduct thorough research to understand the specific requirements and potential of each individual property, regardless of its condition.
Furthermore, developing a comprehensive plan for managing these diverse properties with their unique needs and contractual requirements is essential. Attempting to handle everything on an ad hoc basis quickly becomes inefficient and exhausting. You might consider engaging a property management company to help maintain properties and give homeowners their freedom back while you focus on building your portfolio.
Prioritize Rentability: More Bedrooms = Better Returns
No matter how attractive a deal appears on a single-family property, if you can’t rent it easily, it’s not a good investment. That’s why rentability stands as one of the 4 critical tips for investing in single-family properties in Lubbock, especially when buying houses fast and in any condition.
It’s well-established that 3-bedroom houses rent significantly more easily and command higher rents than 2-bedroom houses. Of potential renters currently in the market, only about 15% will consider a 2-bedroom home. When investing in single-family properties, whenever possible, opt for those with 3 or more bedrooms to maximize your rental potential and create community value.
Single-family properties can form the foundation of a robust and profitable real estate investment strategy – provided you implement these 4 essential tips for investing in single-family properties in Lubbock. At Electrum Properties, we specialize in finding solutions that benefit both investors and homeowners with fair, cash offers.