Real Estate Investments - How Does a Duplex Compare to a Single-Family Home_ TALK Property Management Austin Property Management Company

Real Estate Investments: How Does a Duplex Compare to a Single-Family Home?

When investing in real estate, it’s crucial to understand the differences between common types of properties and how these properties can help investors achieve their financial goals in varied ways. Today, we’re going to examine how a duplex compares to a single-family home as a real estate investment, and there are many things to consider.

Expectations

Duplexes are typically more expensive than single-family homes, and there is higher demand for single-family residences than for duplexes, so selling a duplex may take longer than expected. However, duplexes produce more cash flow over time, and this is very appealing to real estate investors.

Vacancy and Monthly Rental Income

A vacant single-family home will significantly affect your monthly return on investment (ROI) more than a duplex. With a duplex, the chances of both units being vacant simultaneously are low, which means you’ll have a better chance of consistent monthly rental income. With a single-family home, you are responsible for 100 percent of the mortgage if it is vacant.

Property Insurance

Property insurance for a duplex is typically 15 to 25 percent higher than policies for a single-family home.

Return on Investment (ROI)

This is the most important deciding factor when purchasing an investment property, and it’s important to weigh which type of property will generate a better long-term investment return. Several factors contribute to ROI, including property condition, how well tenants care for your property, location, and appreciation potential, just to name a few.

Crucial Questions to Ask When Considering a Duplex

Ask yourself:

  1. How much do I want to spend?
  2. What condition am I willing to accept? (fixer-upper or move-in ready?)
  3. What areas or neighborhoods should I consider for my duplex investment?
  4. Do I want to live on one side of my duplex or rent out both units?

These questions will help guide your duplex purchase. Be sure to do your homework.

At the end of the day, duplexes often offer a wide range of advantages. The critical takeaway is to buy a quality property. Crunch the numbers, do your homework, and select a real estate investment gives you the best chance for a higher return.

Have questions about real estate investing? Reach out to TALK Property Management anytime. We’re always available to help.

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Investing in Duplexes in Austin – Is It Right for You?

If you’re considering investing in Austin area real estate, you may want to consider purchasing a duplex. In today’s blog post, we’ll examine the pros and cons of investing in duplexes in the greater Austin area.

Pros of Investing in Duplexes

  1. Affordability. When you purchase a duplex, you get two units in a single transaction. While they are typically (but not always) more expensive than a single-family home, the fact that you will receive two rental payments may make them a wise long-term investment. Additionally, duplexes are often located in more affordable neighborhoods, which can increase your tenant pool.
  1. Several Financing Options. The most common methods of financing a duplex are cash, conventional loans, FHA loans, VA loans, and 203k loans. A 203k loan may be a particularly good fit for your investment position. This type of loan is considered part of the FHA loan family, but it has some unique advantages, including the cost of repairs into the loan. 203k loans require the owner to live in the property for at least one year and a 3.5% down payment.
  1. Strong Cash Flow Potential. Some real estate investors choose to live on one side of the duplex, making it a more affordable living option. Others opt to find tenants for both units, which improves an investor’s cash flow position. If you’ve used a Deal Calculator to figure your return on investment (ROI), your rents may cover your PITI (payment, interest, taxes, and insurance) and then some. This can make owning a duplex more lucrative than other investment options.
  1. Relatively Easy to Lease. Potential tenants often prefer more space and a more “at home” feeling, and duplexes usually fit the bill. Additionally, tenants only have to share a single wall with one other tenant, which reduces noise and other potential disturbances. Last but not least, if you’re living on one side of the duplex, tenants will often find comfort in knowing that their landlord is near in case of emergency repairs or issues.
  1. Tax Deductions. Because duplexes are considered investment property, they can come with specific tax deductions that aren’t available with single-family homes. For instance, duplex owners can deduct most of their expenses from ongoing maintenance, yard work, and repairs. Check with your CPA to determine your specific tax situation.

Cons of Investing in Duplexes

  1. Rental Income Isn’t Guaranteed. As with any investment, consistent rental income isn’t guaranteed. Before investing in any real estate, be sure to use a Deal Calculator to run the numbers so that you have proper expectations concerning vacancies and your duplex’s vacancy rate. Remember, it’s essential to take the time to find the right tenant. Quality tenants are worth every minute and dollar spent to find them.
  1. Repairs and Maintenance are on Your Dime. When you buy a duplex as an investment property and don’t plan to hire a property management company, you’re essentially signing up to be a landlord. While that comes with reaping the benefits of rental income, it also means that you are responsible for maintenance and repairs. Make sure that you’re ready and willing to invest the extra time and attention a rental property requires.
  1. Sharing a Wall With Your Tenants. While it will often save you money, sharing a wall (or a structure) with a tenant isn’t always the most comfortable situation. The remedy? Commit to finding and screening the right tenant.

The moral of the story? Be sure to do your homework and be diligent about selecting the right duplex investment for your particular situation.

Have a real estate investor or property management question? Reach out to TALK Property Management anytime. We’re always here to help.

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Property Management Write-Off’s in 2020

Owning an Austin rental property in 2020 during the pandemic will continue to be both challenging and an opportunity. Economic changes could create unrest for tenants, and shifts in leasing requirements have proven to provide unique hurdles for landlords. When it comes to handling your property, you need to know what you can do about write-offs.

In 2020, you can still deduct mortgage interest and real estate taxes on your rental properties as well as all of the typical operating expenses. Keep careful track of your spending, and make sure to deduct accurately to avoid paying higher taxes than need be. 

Also, consider your depreciation. A tax-savings can be found on residential buildings over the age of 27.5 years, where you can depreciate the cost even when the value is increasing. There are additional depreciation opportunities with commercial buildings over the age of 39 as well as expenditures on nonresidential building roofs, HVAC systems, and alarm and security systems.   

These are the most simple deductions, but there are many other, more complex tax matters to consider. If you are managing properties, be sure to speak with a qualified accountant about your options. If you need a trusted referral, please contact Dona Brown. 

If managing properties in Austin is getting overwhelming, it might be time to try a local, professional Property Manager that can help boost your return on investment. Contact Dona Brown, Talk Property Management, to discuss your needs and options. 512-721-1094.

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Single-Family Residences, Built For Rent Homes, Meet Austin’s Home Seeker Needs

Trends that began last year have recently resurfaced. Buyers’ and renters’ priorities are shifting as the economy continues its journey through the tumultuous year, uncovering unique opportunities. Austin’s single-family-built-for-rent market will most likely expand as we move further into 2020. What are SFBFRs? They are the comeback trend from 2019 that could help housing affordability and challenges to homeownership due to COVID-19 effects. With demand for single-family homes outpacing supply and even as individuals and families prefer the stand-alone home, not everyone can or wants to buy right now.

With unemployment rates increasing, down payment challenges are also on the rise. Meanwhile, low inventory continues to push home prices upward, and many home seekers are widening their search to include rentals. Renting affords the opportunity to live in specific geographic areas or communities with little commitment and less out-of-pocket cash. However, especially while health concerns have many people avoiding high-density housing, moving into an apartment does not tend to fit the needs of a large portion of the rental market. Professional millennials, those in transition (divorce, downsizing, upsizing), or empty nesters all have something in common: they want the convenience of renting with the privacy and quality of life of a single-family home. 

In the first quarter of 2020, SFBFR activity increased from the previous year across the nation. Its share of build-to-rent homes is taking a larger chunk of the new-home market and many in Austin are seeking such an opportunity, in the form of both renters and builders. Projects such as Urbana, part of Goodnight Ranch in Southeast Austin, are building new homes with high-end finishes and private yards specifically to go directly on the rental market. These upgraded units for lease are a step above apartments, don’t require a long-term mortgage commitment, but still provide the amenities people want and need, such as washers and dryers, spacious floor plans, and someone else to manage the repairs. It’s a win-win. 

Successfully investing in Austin real estate requires paying attention to the market and the demands of home seekers. As we head deeper into 2020 and monetary priorities shift for Austin buyers and renters, it’s critical for those looking to purchase rental property to adjust to them. If you need guidance on the current real estate trends or have questions about managing properties, contact Dona Brown. Her years of experience can save you time and money when investing in Austin. 512-721-1094. 

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Mortgage Rates June 2020 and Investing in Austin

Stay informed of Austin’s investment opportunities and real estate market trends with a quick look at the latest mortgage rates. Mortgage rates continue to linger near the bottom of the graph as the gap widens between home inventory and buyer demand. Even after a slight uptick in rates the first week of June 2020, they are still just .13% above the all-time low. The 30-year fixed mortgage rate landed at 3.18% in early June as the economy heads to the recovery ward. 

Freddie Mac’s national average report shows all rates are trending downward from this time last year:

  • 30-year fixed-rate mortgages: averaged 3.18%, a decrease from the 3.82% rate in June of 2019.
  • 15-year fixed-rate mortgages: averaged 2.62%, down from the 3.28% rate from this time last year. 
  • 5-year hybrid adjustable-rate mortgages: averaged 3.10%. In 2019, these 5-year adjustable mortgages averaged 3.52%.

While rates are still incredibly low, buyers and renters are starting to take advantage and dive back into the home search. Not without precautions, however. In a recent industry survey, management professionals revealed their top priorities are focused on new technology and paperless leasing to meet the concerns and demands of current home seekers who need to know its safe. Technology is allowing the market to keep moving with virtual tours and remote signing solutions.

Investing in Austin can be fruitful, but it takes diligence and market knowledge to maintain a top return on investment. Relying on an experienced and professional property manager can help you avoid the high costs of new technology but keep you relevant in the 2020 rental market. If you have property management questions or are considering hiring an Austin professional this year, contact Dona Brown. Her experience can help you navigate investing and managing. 512-721-1094. 

Also, check out these recent blogs for more Austin investment resources:

 

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When is it Time to Hire an Austin Property Manager? | Cost Versus Return

Investing in Austin real estate is a great way to earn additional income. Once you’ve purchased a rental home, made any repairs necessary to ensure it’s safe and up to code, and secured renters, managing one or two homes can be simple for the experienced investor. But as your portfolio grows, managing more than a couple of properties or expanding your investment area can be overwhelming. When is it time to hire a professional to manage your Austin rental property?

If you are managing properties, you are most likely looking for the highest return on investment and watching your costs carefully. Balancing costs with investment takes careful consideration, and property management companies are both a cost and an investment. Here are factors to consider when determining when to hire an Austin property manager:

Time Versus Money

Rental homes require attention, attention involves time, and your time is valuable. It’s easy to recognize that managing one or two properties requires less attention than working with three, four, or more units. If you have the time but not the money, managing your own rental homes makes the most sense. If you have the money but not the time, hiring a professional should be on your to-do list.

Time Equals Money | Expanding Your Portfolio

The time it takes to manage multiple properties is time you can spend focusing on other ventures including a separate profession, searching for new rental properties, or higher-level management tasks. Instead of taking urgent calls, answering tenant questions, screening renters, or fixing toilets, your time can be spent expanding your portfolio, marketing, or networking. If your time is more valuable spent elsewhere, hire someone to take those management tasks off your plate, and increase the quality of your output. 

Expanding Beyond Your Current Geographic Location

Investing in Austin could be where you start, but if your sights start to focus further outside the city limits, your expertise, capability, and desire to travel may start to wane. Diversifying your portfolio is a smart investment but also requires diversification in management to help subsidize your knowledge base, maintain properties, and balance your time. Expanding geographically would be a time to hire a professional. 
Managing properties in Austin can be a lucrative business, but the best landlords and investors understand balancing costs, time, and knowledge. If you are managing multiple properties, are overwhelmed with management tasks, or considering expanding your portfolio, it’s time to hire a professional property manager. Contact Dona Brown, Talk Property Management, for a local Austin perspective that can help you navigate the area’s investment real estate market, manage your property with experienced ease, and set you on a course for success. 512-721-1094.

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A Realistic Look at Austin Investment Opportunities in 2020

If you are considering investing in Austin real estate as we approach uncertain times in the COVID-19 era, you need to be realistic and ask yourself the hard, honest questions. An economic downturn can offer opportunities for real estate investors where competition is lessened, and the number of those seeking rentals can increase. Investing in Austin requires a keen eye for opportunity, and now is the time to prepare to buy a rental property. 

First, an Austin investor needs to understand the current real estate market. Local REALTORS® have access to resources that an investor can use to study current trends. Consulting with an agent that works daily in Austin’s home buying and selling industry is key to making an informed decision. Recently, residential sales in the Greater Austin area have increased by 2.2% year over year, while the median price hit a spike of 11.7% compared to March 2019. The numbers indicate that the first of the year’s activities were on track to continue pushing the market to new highs. As the May selling kicks off, the housing market could start to see subtle or not so subtle changes due to COVID-19’s effect on the economy. No one has absolute answers, but we can strongly speculate a significant shift ahead. 

Second, those seeking to buy rental properties in Austin need to evaluate their financial situation honestly. Here are a few key areas to analyze:

  • Savings – can you cover at least three months of personal expenses, including having funds set aside for emergencies?
  • Job situation – are you in a stable position, or does your industry anticipate layoffs?
  • Assets – do you have assets that will become a burden and/or are you considering selling one or multiple assets first?
  • Liquidity – do you have readily available funds for a down payment, repairs, maintenance, and future mortgage payments?

2020 health concerns are creating unprecedented times but can also present opportunities for those intending on investing in Austin rental properties. For the realistic buyer, now is the time to prepare for those opportunities. If you need guidance from a local, experienced REALTOR®, contact Dona Brown and Talk Property Management. We serve in Travis, Williamson, and surrounding counties in residential sales and property management. Call 512-721-1094 for a free consultation

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Property Management During COVID-19

Property management in a normal market is a complex industry. There are several complicated moving parts from understanding the current real estate market to staying informed of changing leasing and fair housing laws. Now, take that complex market and add the impact of COVID-19, and property management has become a moving target. 

What do you need to know regarding leasing and property management in Austin during the COVID-19 concerns? 

Tenants who are having trouble paying rent or other fees due to COVID-19 complications can establish a temporary, flexible payment plan with property owners and landlords. As a Texas REALTOR®, you can access the agreement form by clicking here.

Although tenants have the right to ask for assistance in payments, they cannot refuse access to the property in fear of virus-related consequences. They must follow current agreements for entering the property, and if property owners choose to screen those viewing the home, they must follow fair housing guidelines. However, if the tenant is at a higher risk of developing an illness, they may have different rights. When considering accessing a home with a fearful tenant, property owners and managers should move slowly and carefully with respect for the safety of everyone involved. 

Residents struggling with the effects of current health concerns may find themselves well underwater; however, the Texas Supreme Court has suspended all eviction hearings through May 18th, 2020, as well as put other restrictions in place such as prohibiting posting evictions through May 25th, 2020.

An owner and property manager must pay close attention to evolving guidelines in handling tenant nonpayment issues. As health concerns twist and turn current tenant rights and leasing laws, income property owners need to stay up to date on the latest legislation.

If you have questions or concerns regarding property management and rental homes, please do not hesitate to contact Dona Brown with Talk Property Management. Our years of experience make us a reliable resource in Austin. 512-721-1094.

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The Home Office | Why Investing In this Space is Crucial in Selling or Renting an Austin Home in 2020

As health concerns reshape daily lives and force businesses to reconsider their workplace infrastructure, Austin home seekers will have new priorities. If you have a home to sell or an investment property to rent to those looking to move in Austin, pay attention to this developing trend.

The last decade of innovation has created opportunities through technology to work more creatively. Educational institutions brought the classroom to the home, and many businesses offer flexibility to allow employees to work and meet from anywhere. With the current COVID-19 landscape, these innovations are perfectly timed. While current headlines collide with tech tools, the shift in workplace structures and priorities is unavoidable, and it will ultimately impact what people are looking for in a home, whether they are buying or renting. In other words, home offices have just moved to the top of the most-wanted list for searchers. 

Home Office Must-Haves

If you are selling a house or offering a home for rent as an investment property owner, adding or boosting a home office or flex area may help attract the right buyer or renter. Whether it is ensuring the room or space is ready for office equipment, or you are highlighting the most pertinent information in your marketing, be sure to include these home office must-haves:

  1. Good Lighting. Make sure there are plugs available for lamps or overhead light fixtures are installed.
  2. High-Speed Internet. Know what type of internet is available, have it connected, and include it in your marketing information. 
  3. Proper Outlets for Office Equipment. Ensure the outlets are up to date and in convenient locations to handle computers or printers. 
  4. Space. Add built-in shelving or stage the room to show off how it can be used for work or school. 
  5. Privacy. Ensure any space you are allocating as the dedicated office offers privacy with a door or is set apart from the main gathering area. 

Home offices are the next wave of must-haves in a house, so if you are selling a home or offering a rental, it is time to invest in a dedicated space to meet the needs of potential buyers or tenants.

Are you interested in more information about buying an investment home in Austin or need a property manager to help navigate Austin’s rental market? Contact me. I am always here and available to answer any questions you may have. Set up a virtual appointment with me by contacting me below or give me a call at 512-721-1094. 

Need more information about residential investments? Click here to visit our Owner Resource page. 

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Mortgage Rates and Investing in 2020

Austin area investors have incredible mortgage rates to take advantage of, and even lower rates may be headed our way for home-loans. The Federal Reserve recently pledged to buy bonds and treasuries in an effort to stabilize the market this spring and, as a side-effect, will push mortgage rates downward.

In a time when rates are already historically low, how much lower can they go? It is possible that homebuyers could see a 30-year fixed rate of 2.75%, according to President of Naroff Economics, Joel Naroff, who recognizes patterns from previous years. The Fed launched similar efforts in 2008, which in-turn pushed rates down below 5% for the first time in U.S. history.

Mortgage rates are likely to either drop slightly or at least remain the same while the Fed keeps any sudden increases at bay. The reserve institution lifted its cap of $200 billion on spending for mortgage-backed securities (MBS). That move creates the additional buying power of the bonds and treasuries as noted above, and the market for these MBS’s is what impacts the current mortgage rates. 

For now, only time can tell the future, and what is current is that rates are low, staying low, and consumers should watch headlines closely to prepare for any changes in the market.

If you are considering buying a home or investment property, now is a great time to make a move and take advantage of the all-time low rates. The money you save on a mortgage can easily be pushed into renovations, flipping, and a property management company that will set you up for long-term success and sustainability. 

Are you in need of a recommendation for a reputable lender to answer your toughest mortgage questions? Contact Dona Brown; she has a vast network and years of experience to point you in the right direction. 512-721-1094. 

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