“Is renting out an apartment a good investment?” Are you someone who has this question too? You have come to the right place. You may even wonder what if I am unable to routinely lease out my premises to earn a steady rental income. Are you also contemplating investing in a shop instead? These are some of the common sentiments that surface in the mind of every investor. Although an inexpensive apartment, real estate investment is a lengthy and time-consuming process and you need a significant amount of money in hand. Moreover, it is essential that you have a detailed cost analysis done beforehand.
In this article, we will throw some light on investing in inexpensive homes for rent in Corpus Christi, TX, and discuss the returns of the investment to help you make a wise decision.
If this is your first time investing in a rental property, here is a step-by-step guide for your first investment.
Advantages of investing in an inexpensive apartment for rent
- They are easy to afford
Buying an inexpensive house for rent in Corpus Christi TX is capital intensive. You need to have sufficient funds to create a huge investment to buy a house here. Hence, if you are a beginner in the whole investment game with limited funds, investing in an inexpensive apartment can be a good option for you. Cheap houses for rent in Corpus Christi, TX can be a good investment option for people wanting to invest in cash. If the price of the house is affordable for you, you can easily make a cash purchase without having to go through the entire mortgage process. Even if the property is not meeting the lending criteria, you can still buy it. When buying inexpensive homes for rent, with the mortgage, the cost of financing the purchase will be lower too.
- You get an opportunity for a solid and consistent cash flow and a good return on your investment
Cheap rental properties in Corpus Christi, Texas in good locations will likely fetch a higher rate of rental income in relation to the purchase price and ownership cost. You can easily find inexpensive apartments with a rental rate of more than 1% of the cost of acquisition. The cash flow and investment returns are comparatively higher when you invest in affordable apartments. Even though the repair costs are higher the cap rate and the cash on cash return are greater than high-cost homes for rent.
- Higher rental demand
Long-term and inexpensive rental apartments are relatively good rental prospects as they tend to have stronger levels of demand for rentals.
- Rental properties are recession-proof
We all know the economic recession we are facing from 2020. Even then there has been a consistently high demand for inexpensive apartments despite the effect of COVID 19 on the economy. Middle-income earners relocate to inexpensive rental properties in an effort to save some bucks due to a job loss or reduction in their income.
Disadvantages of investing in an inexpensive apartment for rent
- Location – not so good
This is one of the most common issues in renting cheap properties. Properties that have a relatively low price are located in poor neighborhoods. So, if you want to invest in cheap apartments for rent, you need to keep in mind that they might be located in areas of lower-income groups that have high crime rates, below-average school districts, and fewer essential amenities, and poor infrastructure. But, that is not always the case. If you conduct a good rental market analysis, it is possible to get cheap homes for rent in Corpus Christi, TX.
- Maintenance costs can be higher
Inexpensive apartments for rent are likely to be cheap because the property must be very old and of lower general quality. These types of properties have higher maintenance and repair costs. Nonetheless, if you keep an eye for the right kind of property, you are likely to fetch a good deal by doing a few repairs here and there. Hence, you must do your math and know the total costs and your rate of return.
- Cheap properties attract low-quality tenants
Cheap and long-term rentals attract low-income earner tenants. With such renters, you may experience a higher rate of nonpayment issues and tenant turnover. With such tenants, you may need extensive property management. You also will need greater oversight for the collection of rent, dealing with tenant issues, and maintenance costs. However, this risk can be reduced by doing a thorough background check of every tenant.
- Fewer prospects for capital appreciation
Due to the poor location and old age of cheap apartments for rent, there is a lesser chance that the market value of such properties will go up. Most investors buy cheap rental properties for a potential cash flow and not for appreciation.
- Issues related to financing
Cheap houses for rent that require a significant amount of deferred maintenance are usually more difficult to finance. Also, the mortgage rates for such properties are very high. The lenders will expect the investors to maintain a significant amount of cash reserves in order to deal with the repair and maintenance costs and tenant turnover.
- The resale potential is very low
Cheap houses for sale that are located in poor locations or unfavorable neighborhoods or poor conditions face a ton of difficulties in selling quickly and profitably. This is one thing that investors must keep in mind before they make their purchase. In a few cases, it can even be difficult to break even after the sale.
The Bottom Line
Just like any other real estate investment, finding a profitable cheap home for rent in Corpus Christi, TX will require in-depth research and meticulous analysis of all the variables that are involved. Only after going through every motion and choosing your options wisely, will you be able to make a successful purchase decision.
Fret not; the best realtors in Corpus Christi, TX are here to help. Once you want to start looking for and analyzing the best investment properties in Texas and the neighborhood of your choice, contact them today!