Your financial goals will help determine your investment strategy. Here are some of the most common investment strategies.
- Cash flow – Property earns more rental income than the cost of mortgage, property management, rates and other maintenance costs.
- Appreciation – Property earns minimal to negative cash flow, but is in a market with predictable appreciation
- Capital Growth – Buying in desirable areas with long-term growth prospect. The property will have a cash flow shortfall that you can claim against your other income.
- Fix and Flip (quickly or 5 yr) – Renovation strategy where you actively seek out properties that you can improve to boost value or rent.
These will vary depending on your investment strategy
- Neighborhood quality – B/B+ properties will give you the least headache
- House quality – Clean, not overly updated or customized. There is a diminishing returns curve with the size of the property
- Property Taxes – Property tax rates vary throughout the Austin area
- HOA – High HOA fees can hurt your ROI
- Schools – Proximity to schools, especially elementary, often trumps ratings
- Crime – Areas with high crime are unlikely to improve
- Job market – Know what the current and future job opportunities nearby are
- Amenities – Pools and playgrounds are always popular
- Rents – Check what other homes in the neighborhood are actually renting for, not listed at.
- Vacancies/DOM – How fast do homes in the neighborhood rent
Documents for Lender
Applying for a mortgage is simpler task when you’re prepared. Either before or during the offer process you’ll want to gather these documents so you can share them with your lender as soon as the offer is accepted.
- Copy of driver’s license for all borrowers
- Copy of green card for all borrowers if not US citizens
- Last two years tax returns – all pages, all schedules
- Last two years W2s
- 1-3 months most recent pay stubs for all borrowers
- Two months most recent checking, savings, brokerage, and retirement account statements – all pages
- Mortgage statement on all properties owned
- Copy of homeowners insurance and property tax bill if not included in the mortgage statement above
- HOA statements for all properties owned
- Copy of current lease agreement for rental properties owned
- 3 months most recent cancelled checks or proof of deposit for rental properties owned