Investors have had a lot of success purchasing small apartment buildings or single homes to rent out. However, others have lost everything doing almost the exactly the same thing. Here are the top things you should look for to help figure out if the property you're choosing to rent out is going to be a winner.
Real estate agents always tell their private buyers location, location, location. The same thing applies to investors, but you need to think about it differently. Instead of thinking about what you would want to be by, think about what your potential renters would already be by.
Are you buying a property near a big college? You'll have plenty of student renters to choose from, but expect people looking for a quiet lifestyle to steer clear.
Are you trying to turn your property into an upscale, high rent home? A property on a cheap piece of land in the middle of nowhere will be high risk because the number of people looking for a long commute is lower. Look for properties near strong business districts or popular vacation spots.
The size of a rental property needs to be just right. Except in very high demand rental markets, people run away from small floorplans, and if they do choose a smaller home, it's almost always settling for it because the rent is cheap.
A large property will also increase your risks. Instead of a quiet tenant who is always away at work, you're likely to get a big group of roommates looking for a party house or a big family whose kids will terrorize the neighbors and possibly cause extra damage. While you can't discriminate in who you rent to, you can pick a property that is most likely to meet the needs of what you consider to be an ideal tenant.
Skip the Big Yard and the Pool
Most homebuyers and renters want a big yard and a pool, but as an investor you should avoid them. The small increase in desirability of your property and slightly higher rent won't make up for the headaches.
As the landlord, you will be responsible for the extra maintenance work. While you might be able to make tenants responsible for it in the lease, it's likely they wouldn't do it properly and cost you more time, money, and headaches down the road.
To get help choosing a new property to rent out or to put your rental property on the market, contact a local property management company such as Shook & Tarlton Rentals today.Share