Hey everyone it’s Austin Solomon, The Solomon Group at Coldwell Banker. Coming to you live with a new episode of The Real – Wausau Real Estate Show.
Today we are talking about getting started in investing in real estate… where to begin and some tips for the pros and cons of getting into investing.
If you’re thinking about starting to invest in real estate, you might consider starting with a single family home. One of the biggest tips that I can give someone who is aspiring to invest in real estate is just to get started, that is the hardest part. There are a lot of times I meet with an investor and they have an idea of this ideal property that they’re looking for, and it’s their first time they are going to start investing. And it takes them such a long time to get the first deal started, that they might have been better off starting with something small and building that confidence that can lead to a lot of other opportunities.
One of the nice things about starting with a single family home… you purchase a single family home and rent it out… one of the nice things about starting with just one unit is that you tend to be able to invest for a relatively low cost.
For example, if a bank requires about 20-25% down for an investment property and you’re starting with a starter home that is $60K – $100K for a price point. Then you’re looking to put between $15K – $25K down to get started with your investment.
Some of the pros of investing in a single family home and why it’s good to start there is you attract a little bit better of a tenant for a single family property versus say a duplex, triplex, etc. In general, you tend to attract a little bit better of a tenant, by better tenant I mean less problems, someone who may maintain the property and less turn-over and less calls & hassles that are involved. So that is one of the biggest pros in a single family home.
Another thing is the appreciation in single family homes. There is more of it and it happens quicker. Especially over these past couple of years, if you would have bought a single family home for $60K 3 years ago, it might be worth $90K now. But if you bought a duplex for $60K 3 years ago, it might be only worth $75K. So that appreciation has really gone up for those single family homes and in general the demand for single family homes tends to lead to greater appreciation.
Another pro of single family homes is if you get into investing and it doesn’t work out, you’re tired of being a landlord or there are lots of issues. It tends to be easier to liquidate that sale because of the demand for single family homes versus some of the alternatives – they might be more tricky to sell and liquidate.
Now, some of the cons to a single family home is it’s only 1 unit. So if that tenant leaves, you don’t have any more income. That is why it’s really important to keep those units occupied and keep those vacancies down with a single family.
Relative to some of the other investments, duplex, triplex, etc. single family you may not have as high of returns.
Let me through out a quick example. Let’s say you purchase an $80K house and it rents for $850 / month. So your gross rents are $850 per month on an $80K purchase price. You might be able to purchase a duplex for $80K and now you have 2 units, each that rent out at $500 per month, so your gross rents are $1,000 per month. This is a pretty realistic example. So, with the duplex you have higher gross rents. As a single family home, that is one of the cons as you may not have as high of returns.
#1 tip in all of this is just to get started. I’m making a plea and a case just to get started and that is why I think single family homes may be a good opportunity to start small and building confidence is a great play for a lot of people.
You don’t always have to come in and make a super investment that is going to lead to financial freedom and realistically it’s best to just start small, it doesn’t have to be a super deal. Just something that gets you that experience and that confidence that you can build to make other real estate investments down the line.
Thanks for tuning into this week’s episode of the real, if you have any questions, would love to answer those for you. Feel free to reach out to my cell direct – 715-212-4693.
Have a question or idea you’d like to learn more about? Email our team at email@example.com!
Austin Solomon | The Solomon Group – Coldwell Banker Action – (715) 212-4693
Have feedback or a podcast suggestion! We want to hear from you!