Single Family Home Investment: Worth It?
Invest in the Long-Term Perspective
As the owner of North Star property management, I started buying rental homes 30 years ago and boy, was it painful. I wondered if the numbers would work out, especially adding in the costs of maintenance and remodeling. Remodeling!? How much is enough to boost rentability but not cost so much that the payments were not covered each month? What about vacancy, bad tenants and market problems (like Covid). Is this even worth it?
North Star was built to handle these types of questions and problems that I had 30 years ago. In the end, the numbers tell us that our market in the Pacific Northwest makes investing more than worth it.
Every investment has ups and downs, but the underlying increase in property values here helps keep us on a growth trajectory. After forming a team that could handle tenant issues, leases and maintenance, I found that the daily headache of management went away and I could just focus on my investment, leveraging it to buy more investments.
When Covid hit, the laws forbidding evictions scared a lot of folks into selling assets that have absolutely exploded in value over the last two years. We found that if you had purchased in the right area and had attracted good tenants, the odds of having negative issues during Covid was less than 1%. When measuring the value of a rental home, most people calculate the monthly cash flow income and stop there, but in most cases the equity growth far outpaces rental monthly cash flow income.
So, is it worth it? The short answer is yes, but with the right team. It is important to purchase in the right area, attract a great tenant, then manage correctly. North Star helps with all three. Let us show you the value of equity growth and how an investment paves the road for prosperity.
This home is on the south side of Lake Oswego and has lake easement access, it was:
- Purchased in August of 2017 for $550,000
- Remodeling cost $65,000; updating advised by the North Star team
- Rented within 30 days of the purchase by North Star for $3,250 per month
- Market Value in August 2021 is $995,000
- 4 Year equity growth 81% or just over 20% per year
- Rented in 2021 for $4,500 per month
- 4 year rental rate growth 38% or just under 10% per year
When it comes to preserving your equity and growing your value, we know what to do and what not to do. Our hard-earned knowledge and seasoned expertise can help guide you on your investment journey.