Today we are providing you with a few tips on what to look for when you are buying investment properties. Some of these things are important, and you will want to discuss them with your experienced real estate agent before you buy.
Compare what you are paying for your home to what the rents in that area are going for. If you’re looking to break even on your real estate investment, take the rents into consideration well before you buy. When it comes time to rent your home, potential renters won’t care how much your mortgage payment is, so basing your rent price on your mortgage amount is unrealistic. Renters only care about fair market pricing. So a wise investor or real estate investment manager will figure out if the purchase price is worth what you can charge for rent.
Buy appropriate for the area. Management 1 Tri-Cities Realty & Property Management covers areas such as Pasco, Richland, and Kennewick WA, where we see a lot of families moving into the area. With so many families looking for homes, it does not make sense to buy a one bedroom home, or even a two bedroom rental. In areas commonly favored by families and children, look for a home with three or four bedrooms if you want it to be a competitive rental. Families are looking for space and rooms to put their children in. If the house is too small, it will be overlooked. Purchase according to demographics so you know who your common tenants will be. In some areas, it might make sense to buy a one or two bedroom because the area is full of business people looking for an easy commute.
Think about amenities. Owners often wish for upgrades like granite and stainless appliances to add value to the house for rent. The bottom line is that these amenities will add to the desirability of the property over a home that does not have such upgrades, but it probably will not increase your total rental income. As a buyer, you get something out of the granite countertops and the stainless steel appliances. But renters, while they do appreciate those extra features, often won’t pay more for them simply because they aren’t taking them with them when they move out. Don’t spend money that will not give you a good return on your investment.
Also, consider the benefits and challenges of swimming pools. Depending on where you live and the time of year, pools will bring a premium on rent prices. However, you will have to provide maintenance and weekly cleaning service for the pool. It is your asset, after all; landlords can’t expect renters to take the same care of expensive assets the same way as the owner would. Don’t expect to leave maintenance up to the renter because most tenants will not know how to professionally care for a pool, and you don’t want that investment to decline in value. So, remember that whatever money you make in rent because you buy a house with a pool will likely be spent on the servicing and maintenance of the pool. Same goes for spas or hot tubs. Don’t trust your expensive additions to be cared for by every renter.
Before you buy a rental property, get a professional home inspection. Without a doubt, every home for sale has at least one thing wrong with it. If you’re not the person living there, you aren’t likely to be the one who finds it. Don’t let a hidden problem interfere with your chances of having a good tenancy and a profitable investment. A good professional inspection can be had for a couple hundred dollars, and can be a well placed investment in your investment. Find problems and fix them before your tenant does. Nothing makes landlords hate being landlords more than getting calls right after a new tenant moves into your investment property complaining about something simple that went wrong and is now a major problem.
One of the most important things you can do to achieve success as a real estate investor is to be proactive, plan ahead, and have a financial pad… money set aside for those unexpected problems that almost always come on Friday night on a long three day holiday weekend. Avoid after-hours emergency maintenance call-out fees by looking for problems first, fixing them second, and renting the home in good condition third.
If you have any questions on how to buy an investment property that will perform well in the rental market, Management 1 Tri-Cities Realty & Property Management is very experienced in buying, operating, and managing successful rental investment properties. Consult an expert before you lose thousands of dollars. Please contact us at Management 1 Tri-Cities for assistance in planning, locating, purchasing, and managing your investment rental property.