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Rental
Properties
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You can rent out any habitable house, but not every habitable house makes a good rental.
From location to age, properties vary greatly and those differences are what make a rental a sound investment or financial burden.
These are the
points you should consider before investing in a rental
property:
Location:
Location is the most important feature to consider when buying a
home, whether for your own living or for rental
purpose. The speed at which you'll be able to rent your property and the quality of tenants
will most likely be determined by your rental's location.
Everybody wants a perfect neighborhood whether a
tenant or a home owner. After some time if you want to
sell your property and if you have a good neighborhood
, you'll be able to get more for the property and sell it more quickly.
Tenants may not prefer to live in apartment buildings
that is in a neighborhood of another large apartment
buildings. After all, a neighborhood full of apartment buildings means that there's going to be high density, along with associated cars, motorcycles, noise, children and adults. Further, your units will be competing with nearly 500 others for the same tenants. You can expect it will be harder to rent and harder to resell.
The best environment for a small or even large apartment building is in a neighborhood of mainly single-family homes. This helps lower the density and creates a more desirable place to
live.
There are lots of rentals, tenants are constantly moving in and out. The more tenants you have in a small area, the more unstable the neighborhood tends to be.
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Features:
Never evaluate a rental property in the same way you'd assess a home for yourself.
The special features that add value and class to a home whose occupant is the owner can be the kiss of death where the occupant is a tenant.
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Size
And Layout: Some homes are too big to make good rentals, and others are too small. Consider the number of occupants a property can house.
If a home has five or six bedrooms, a typical renter will be a large family with lots of children. Or, two families will share the home and divide the rent.
But smaller property may be a better choice. Three bedrooms are
enough.
The number of bathrooms in a house also matters. Some
smaller houses have just one bathroom, sometimes for three or four bedrooms. This is an untenable situation for most families.
Therefore, a home with only one bathroom is far harder to rent than one with two or more.
The layout of a home is also important. A home that has a mudroom or an entryway where people can shed or clean dirty shoes before coming into the main entrance goes a long way toward keeping your carpets clean and in good shape. A similar entrance from the rear or garage also helps.
Tenants are likely to accept lots of stairs in a home, but homeowners aren't. Therefore, these types of properties will be difficult to sell down the road.
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Rental Market:
The value of a rental property depends upon the local rental
market. Some areas simply don't have a large population of tenants. In others, the tenant population may be looking primarily for inexpensive homes or, alternatively, expensive ones.
There will always be someone looking to rent in any area, but as with buyers, the more tenants, the better your chances of hooking one.
It's important, therefore, to take stock of the rental market in the area in which you plan to buy a property.
You can ask a real-estate agent to provide you with the rental inventory statistics for your area. These typically include the number of rentals listed, the average time it takes to find tenants, and how the report compares with those of previous years. Ideally, you want a rental market where the rent-up periods are less than a month.
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Age: The age of the
property is a important factor. Newer properties tend to make better rentals because they come with fewer problems. Older properties often need maintenance.
But if older properties have been properly renovated, then they may operate for years without a costly repair. On the whole, however, younger properties tend to fare best as rentals.
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Yard: A large yard may seem great until you realize that it's nothing but work. Unless you plan to have a gardener on a regular basis for both the front and back of your rental, look for a property with a very small yard.
Big yards tend to result in heavy water bills. Tenants
don't prefer to pay the water charges for a large
yard. You just can't expect tenants to maintain the yard.
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Financing:
Financing is a major determinant of a property's rental value. It often makes the difference between positive or negative cash flow.
The type of financing available is often determined by the value of the property. Older properties may not be able to get financing at as low an interest rate as modern ones. The credit worthiness of the borrower is also an important factor. A lower-priced property could help an investor get a better loan deal with less credit.
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To conclude we can say that finding a good rental property takes hard work and patience. A rash decision could cost you a lot of time and money. Be careful and do your homework and you'll find the right investment for you and your tenants.
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