Real Estate | Investing In Single Family Homes

Investing in single family homes is where most real estate investors get their start. Single family residential investment property is where I got my feet wet as well. You won’t get rich with one investment property, but it will give you valuable experience which will help you in the long run. There are simple things you can do with your first residential investment property to increase its value. Painting is something simple and cost effective that will increase your investment property’s vaule. Adding shutters, landscaping, new appliances, things like this can add tremendous value with little work and cost.

That is the beauty of buying a single family home for investment purposes, unlike condos, you don’t have any restrictions to make changes to the property. If you are in a PUD or planned community there will be restrictions on what you can do to the property, so keep that in mind.

Researching
When making the decision to buy a single family home, it is important to do lots of research to make the best investment. Check the market and see what areas are of high demand. Also look for diamonds in the rough. If you can find a property that needs a little TLC and it is in a nice neighborhood. I would strongly suggest making a go at that property. If you put a little money into your investment, you can let the neighborhood sell the property for you. There are times when neighbors will be excited that you are buying a property that needs some help. It will increase the beauty of their neighborhood and increase the value of their home.
Usually the thorn in most property investor’s sides will be permits. You have to have permits before you can begin working on your investment property. In some areas it will be more frustrating to get permits than others. It will be ideal if you were to find an area where getting permits are easy and not very expensive. Some property investors include this factor in their decision of whether to buy an investment property in a particular area or not.

Finding good deals
When you are trying to find a good deal there are a few things to look for.

Find out why the seller wants to sell the house. They may be open to more creative financing or a lower price to get rid of the property.

Find out the price per square foot. Then compare this with your comps in the area to see if it is a good value or not.

How many bedrooms does it have? Generally, the more bedrooms a house has, the easier it will be to sell.

How long has the property been on the market? Often times if the property has been on the market for a long time, sellers will do just about anything to get the property off their hands. This is great for the investor.

The other great thing about beginning real estate investing by buying single family properties is that you can live in the property yourself for a couple of years. After that two year period you can avoid capital gains taxes. You could start the process all over again if you wanted. You MUST live at the property for AT LEAST 2 years to avoid these taxes. Otherwise you will have to pay them unless you do the ‘ol 1031 exchange.

This is a great way to get started for the many benefits described above. You can also think about it this way. If you have done your research and you buy the investment property in a good area, after a couple of years, you could potentially have made enough money to purchase 2 homes. You could live in one, again and use the other property as a rental investment property. Your investments can build upon themselves, increasing your wealth at a much faster rate.