1. LOCATION. The location will determine the tenants who will occupy your property. More desirable properties will appreciate faster than those with undesirable locations. The average time the property is on the market vacant will be less.
2. PROPERTY CONDITION. If the property has major structural problems such as a cracked foundation, major rook leak, and sheet rock damage everywhere let us find you a property in better condition. These homes are money pits and will continually need expensive repairs made.
3. REPAIRS. Repairs to investment properties should be reasonable. There is no reason to put granite countertops and stainless steel appliances in a home when all the tenant desires is a clean home with working appliances.
4. FORGET FLIPPING. Houston did not have the rapid appreciation in housing that took place in Los Angles and Nevada. Houston had a steady rise in home values until the recession when values have dropped anywhere from 25 to 50% in some areas. Think long term in your investment strategy. Houston Real Estate has been an excellent investment.
5. FINANCE. Investors may have to put anywhere from 20 to 30% down. Loan rates are very good for investors now.
6. COST OF OWNERSHIP. Texans pay for most government services with their property taxes. Insurance rates are reasonable as long as the property is not near the coast or in a flood zone. There will be some maintenance needed especially when tenants move out. The home may remain vacant for a couple of months which will add to the costs. When figuring out your budget includes all costs of ownership.
7. CURB APPEAL & FLOOR PLAN. The attractiveness of the exterior will help lease the home quicker. The house may need to be refreshed outside with paint and new landscaping. If the home has a non-traditional floor plan it will be harder to lease and may lease for less than a similar sized home with a traditional floor plan.
8. WORKERS. Repairs should be done by licensed bonded contractors. All major work should be permitted and repaired according to local building codes. Contractors should carry insurance covering their workers.
9. MANAGEMENT. Your tenants need to have a background check done after they have submitted their lease application. When in doubt don’t lease. The eviction process in Texas can be time consuming.
10. TAX BENEFITS. Rental property provides the owner with income, capital appreciation, and income tax deductions. The tax code permits most owners of residential rental properties to offset income by writing off numerous home rental expenses.
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