Education and news for smart DIY landlords!
Planning to start a rental property business?
For starters, you might want to do your search. It can be a bit taxing if this is your first time to deal with real estate. Getting help from a real estate agent may seem like a good idea but hold that thought for when you’ll be completing the purchase. It might only put pressure on you to purchase a property that doesn’t seem to fit what you envision.
It’s best to manage the property on your own. But if you want stress-free and if the budget permits, get a property management company to take care of it for you. Nonetheless, if you plan to personally plan to manage it, find one that’s closer to where you live. If you’re opting for a property management company to do it for you, then it’s the least of your concern.
Now, let’s go property hunting!
There are a lot of considerations when looking for a rental property to purchase. Here are just some of the basic features of a profitable rental property:
What’s the neighborhood like? Is the property a single-home in a quaint town? Is it a unit or a building in a booming city? How are the neighbors? What’s the crime rate? I hate to be asking the last one, but no one wants to live in a neighborhood with a lot of crime going on. All these can also affect your rental rate, vacancy rate and the kind of tenants you will attract.
This will vary across your target area. High property tax isn’t always a bad thing, especially if the area attracts long-term tenants, but this isn’t always the case. Check with the municipal assessment office for the tax information. This is also a factor when deciding how much rent you’ll charge.
If you’re renting out an entire home or a 2 to 3-bedroom apartment, chances are you’ll be attracting families. Consider a property that has good schools nearby. This can affect the overall value of your investment rent-wise and in case you eventually decide to sell it.
Related: Should You Rent to College Students? The Benefits and Potential Risks
A pristine property will be expensive. If you’re getting a property that needs some work to be done at a cheaper cost, make sure you’re prepared to have everything fixed before putting it up for rent. Little renovations and home improvements can add value to the property and you’ll be able to charge a higher than average rent.
Places with rising employment opportunities attract tenants from everywhere, so there will be a need for more rental properties to house them. Check with the U.S. Bureau of Labor Statistics to give you an idea of job availability in the area you’re eyeing.
Scout the neighborhood. How close are restaurants, malls, theaters, and public transportation? Are there parks? If you’re looking to buy a condominium unit, check the amenities of the building like a pool, gym or parking spaces.
Reach out to the local planning department for future developments in the area. It can be good for your property in the future, especially if the area is a bit deserted at the moment. Developments may mean more jobs and more people coming in looking for homes. But it may also deter people from renting with all the construction going on, plus it may also mean more housing competitors coming up. Do a lot of weighing on this one.
Check local listings. Find out the reasons for high and low vacancies in the area. A high vacancy may force owners to lower rates and the low vacancy may let you put a little premium on the rate.
It’s important to know if the area is prone to natural disasters for insurance purposes. If the area is prone, then consider finding a property that can be more cost-effective for you.
If you’re ready, make Landlord Prep your go-to resource for landlording education. Here, we offer a complete DIY landlording course to get you on the right track. Join our academy today. If you want, you can check out Flavia’s real estate investing webinar first!