Steps
- Location. If traffic is heavier, rentals are easier to rent. A sign will often pull more response than an ad in the paper. If it is a nice locale, it will usually rent faster. This is also true of places close to amenities.
- Numbers. Run the numbers. Get every last expense figured into your calculations, and be sure that you will have positive cash flow from the start.
- High home prices. Look in towns with high home prices, as this creates rental demand. What do people do when they can't afford to buy? They rent.
- Low maintenance buildings. Avoid cedar-shake roofs, and wood-sided buildings. Look beyond current expenses to how much maintenance the building will need. Low maintenance means less headaches and more profits.
- Good rental history. Ask to see the rental history. Note how long residents are staying on average, and how well they pay on time.
- Below market rents. Buying rental properties with below-market rents means you get to raise rents. Raising rents means you immediately raise the value, because rental property values are based on income.
- Complies with zoning and fire codes. Have it inspected, and ask local officials if there are any problems.
- Less than 20 years old. This is somewhat arbitrary, but if you limit your search to newer buildings, you will be less likely to have building code and maintenance problems.
- Owner/manager that is out of state. These properties are often the best deals, because it is tough to manage a property from far away. An out of state seller is often more concerned with a quick sale than a high price.
- Neighborhood is stable or improving. Stable is okay, but if you can buy in a neighborhood that is improving, you'll rent the units more easily, and therefore get automatic appreciation in value with time.
Tips
- For more information about buying, renting or selling your home, please visit:
- Home Equity Guides.
- Also see: Ways of Getting the most out of your Home Equity.
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