What is the hardest part of being a Landlord? If you have good tenants, the hardest part is staying on top of maintenance and dealing with the calls of a broken toilet late at night.
If you could avoid that headache, buying more rental property would be an easy choice, right? The best solution is to purchase newer rentals, to minimize the cost and frequency of repairs.
Just one problem: finding good newer property to purchase! Most newer single family homes sell at a price that is not cost effective for rentals. Individual townhomes are not an easy solution, as many condos and townhomes restrict rentals. If you do find townhomes that are not restricted in rentals, then the condo/HOA fee can make it less efficient of a rental.
Solution? Find a community and build some rentals yourself. This is easier than you think. If you have a good builder partner, they can handle the work, while the investor handles the capital.
If you are interested in working on a development project, the time to build that stock is now. During the recession, building almost ceased, so now there is pent up demand for new housing stock in rentals and sales. This provides the investor the opportunity to enter a hot market and build future appreciation.
The reasons Central PA makes the ideal place for an multi-family development right now:
- Cap rates are higher in smaller markets. Contrast a CAP Rate of 6.36% (10 Year average) in Philadelphia with 6.91% in Lancaster and 7.34% in York County
2. The demand for rentals are strong. With many manufacturing and supply chains housed in the area, jobs are plentiful which boosts the housing demand.
3. A low inventory of newer units means the developer will be rewarded when time comes to sell with a healthy investor demand.
For a list of options to build rentals in Central PA, and builder partners, contact us for further details. Call Naomi at 717-819-2825 or email email@example.com
As investors, we are always looking to make a smart purchase. You have heard the saying: ‘The money is made when you buy, not when you sell’.
Weighting the CAP rates on an investment is an art. As the ‘Artist’ for your painting, the decision of what CAP rate to apply takes into account the factors of the area around it. Considering the CAP rates of the different Counties in Central PA is a useful tool to use as you paint your future.
Here is a look at the prevailing economics for Multi-Family Investments.
-Currently at 8.16% average. The 10 year range is 8.99%.
-Currently at 7.70% average. The 10 year range is 7.83%.
-Currently at 10.04% average. The 10 year range is 11.04%.
-Currently at 9.60% average. The 10 Year range is 10.48%.
Interesting to note, both York and Lancaster County are at the lowest point of their 10 year average range. This reflects the rising prices in the market and improving economy.
All counties show a lower than average CAP rate, which means that the deals are harder to find and in higher demand than ever before.
If you are looking to maximize your profit and find better than average returns, call for a consultation. Together we can create a masterpiece for your future.
Naomi Brown 717-819-2825
Just starting out as an investor? Have no fear, it is simple.
Why choose real estate as your investment? Here are a couple reasons:
- -It is inflation protected, and grows in value as the inflation rate increases.
- -Once a loan is paid off, you enjoy ongoing cash flow for years to come.
- -Costs to operate and own the real estate are all deductible.
- -‘Passive Income’ from investments are subject to less tax.
So you are ready to go find a property? Here a a few things to know first:
- -Loans will require a 25-30% down payment, plus closing costs, and funds needed to fix the home up when needed. If you have cash, a discount can be expected.
- -It is a wise idea to have your property in an LLC, so plan ahead. They are easy to create, but it will take a little time.
- -Consider your strategy first: will you manage it yourself? Hire a property manager? If you will manage yourself, being close by makes it much easier.
- -Research what rental rates are, so you know how much you will make on your investment.
- -Learn to figure a CAP rate. This is a simple calculation where the money made after expenses is divided by the sale price. The ratio is your CAP rate. Rates vary in this area from 6-12%.
Make THIS YEAR the time you take action to ensure your future financial freedom.
Call or text with questions and get started making money!