Real estate investor shares his acquisition strategy: buy townhouses

Atif Afzal knows exactly what he is looking for when choosing a rental property.

“They have to be townhouses,” the 39-year-old real estate investor told Business Insider. “I avoid single-family homes altogether.”

Afzal bought his first property in Monroe — a city about 50 miles north of New York City — in 2019. A year later, he bought a second one, moved in and filled the first one with tenants. He did it twice more, growing his portfolio to four townhomes.

In 2023, he purchased his first single-family home, where he plans to live long-term. BI reviewed his portfolio, which includes four long-term rentals and one primary residence, by reviewing his tax and mortgage records.

The rental income from his townhouses — according to leases seen by BI, he earns $8,500 a month from three of his apartments (a fourth is currently on the market) and is estimated to have an average net cash flow of about $5,000 a month — allows him to work as a freelance film composer and songwriter without feeling financial pressure.

As a creative freelancer, “you’re unemployed until the next job,” said Afzal, who worked at KPMG early in his career before quitting to pursue a career in the music industry. “I like to be in a good mood when I’m writing music. I don’t want to worry about the rent and stuff like that.”

His ideal investment property: A terraced house in excellent condition

Afzal prefers terraced houses because they require much less maintenance.

With a single-family or multifamily home, “there’s a lot of maintenance that I’m responsible for, whether it’s lawn care, snow removal, pool maintenance, etc.,” he said. But with a condo or townhouse, most of the maintenance is covered by the homeowners’ association, or HOA.

There are HOA fees — they range from $370 to $458 a month, he said — but they are worth it because they save him time and headaches, he said.

Another way to mitigate potential problems is to purchase “healthy” properties that are already in excellent condition.

“The most important thing I look for is how the inside of a house is maintained,” Afzal said. “I buy properties that are in the best condition possible.”

He’s not looking for a project that requires a major renovation and would rather spend “an extra $20,000 up front” than invest in a more involved renovation, he said. As a landlord, “the biggest pain point is when tenants keep calling you, ‘Oh, there’s a leak. There’s this, there’s that.’”

Since he manages all his properties himself, he prefers to spend more up front and save time and money later.

Owning rental properties “is a business,” he emphasized. “You want your customers to be happy. So the tenants—they keep me happy by paying on time, and I keep them happy by taking care of it.”