Purchasing rental property is a popular real estate investment plan these days. Rental property can pay dividends in the long run to its owner and while being a landlord has its challenges, it is still a great way to be a successful investor. However, before you dive into an investment, there are several things to consider. The following are a few tips to think about when purchasing rental property.
Do Your Own Walk-thru
Before you purchase a rental property, or any piece of real estate for that matter, visit the location and personally inspect the home. It is imperative that you inspect the home as if you were going to live in it yourself. Make a list of any concerns you have with the property and bring them up to your real estate agent. It might even be a good idea to hire a home inspector who can give his or her professional opinion on the state of the house.
Double Check Utility Costs
All savvy renters confirm recent utility expenses before renting property. It only makes sense that a potential landlord would do the same. Contact the local utility offices to verify utility expenses. You should check out gas, power, water, and waste costs when applicable. If a home has exceptionally high heating bills in the winter, it might be harder to rent or it may require repairs to the home. Also, at this time you will want to consider whether or not you will include utilities as part of the rent when you lease out the home. These are all things to consider before buying the home.
Buy Local
As a landlord, especially if you are just starting out, you don't want a bunch of rental properties situated apart from each other. If you plan on managing your own rentals this is even more important. Invest in property close to your home. A good rule of thumb is to purchase homes no more than an hour drive from yours. If a tenant calls with a problem and needs your assistance, you don't want to drive a great distance to get there. If your investment property is an hour away, that puts you out two hours before you have even addressed your renter's primary concern.
Check Out the Neighbors
If you are buying property in a subdivision or neighborhood, check out who will neighbor your new investment. You do not want investment property that is bordered by a cluttered yard or a noisy family. If there are cars sitting in the front yard, you might want to think twice about dropping your hard earned money into that particular piece of land.
Check Out the HOA
If your potential investment is located within a Home Owners Association, inquire about the organization's rules and regulations. While HOA's can benefit investors by serving as a watch-dog over rental property, they can also become a pain if they are heavy handed with their members. Some HOAs have been known for having rules stricter then the city they are located in. An overzealous HOA could mean more trouble then you want to deal with.
