Atif Afzal knows exactly what he wants from a rental property.
“It has to be a townhouse,” the 39-year-old real estate investor told Business Insider. “I avoid single-family homes at all costs.”
Afzal bought his first property in Monroe, a town about 50 miles north of New York City, in 2019. A year later, he bought and moved into a second one, then his first one had tenants, and he did that two more times, expanding his portfolio to four townhouses.
He plans to buy his first single-family home in 2023 and live there long-term. BI reviewed his tax returns and mortgage records, and verified his portfolio, which includes four long-term rental properties and one primary residence.
The rental income from the townhouses allows him to work as a freelance film composer and singer-songwriter without feeling any financial pressure: He earns $8,500 a month from the three units (a fourth is currently for sale), according to rental agreements seen by BI, and estimates his average net cash flow at about $5,000 a month.
For creative freelancers, “you're unemployed until you get your next job,” says Afzal, who worked at KPMG early in his career before leaving to pursue a career in the music industry. “When you're composing music, you want to be in a good mental state. You don't want to worry about housing costs and things like that.”
Ideal investment property: A townhouse in good condition
Afzal prefers townhouses as the maintenance costs are much less.
With a single-family or multifamily home, “there's a lot of maintenance you're responsible for, like lawn care, snow removal, pool maintenance,” he says. But with a condo or townhouse, the majority of maintenance is covered by the homeowners' association, or HOA.
HOA fees range from $370 to $458 a month, but he says it's worth it because it saves him time and hassle.
Another way he alleviates potential headaches is by buying “sound” properties that are already in good condition.
“The number one thing I look at is how the interior of the home has been maintained,” Afzal says. “I buy properties in the best condition possible.”
He said he isn't looking for projects that require major renovations, preferring to “pay an extra $20,000 up front” rather than investing in a property that needs fixing. “The biggest problem for landlords is when tenants keep calling and saying, 'Oh, we have a leak. This and that.'”
Since he manages all his properties himself, he wants to incur extra expenses at the front end and save time and money at the back end.
Owning rental properties “is a business,” he emphasized. “You want to satisfy your customers, and that means my tenants satisfy me by paying me on time, and I satisfy them by taking care of them.”