Owning a rental property can be a great investment because it can provide you with passive income. If you want to get the most bang for your buck, you’ll have to make sure that the property is well maintained, which may mean hiring a property maintenance company to help.
However, there’s a lot more to making sure your rental property is lucrative than just keeping it well-maintained. It starts before you even make a purchase. Here are the 3 features to look for when you’re ready to purchase a rental property.
- Look for a property in a great neighborhood
The first thing on your list should be a great neighborhood. There are quite a few reasons why this is so important to consider when purchasing a rental property.
It’s hard to find and keep tenants in an area where crime is high. In addition, rental prices are always quite low in these areas, so you aren’t likely to make much of a profit on the property.
Just because you don’t want to be on the bad side of town doesn’t mean you have to be on the ritziest side of town either. Many property owners have the best luck in working class neighborhoods that are surrounded by businesses, houses, and other rental properties.
There are other things to keep in mind when looking for a good neighborhood. Great schools and amenities, like nearby parks, malls, pools, and bus stops are appealing to renters.
- Consider your budget, even after the property is purchased
Of course you need to consider your budget. You should look for a property that offers a great value in the neighborhood that you’re interested in. However, you also have to think about your budget even after the property is purchased.
That rental might be a great deal, but if it needs to be fixed up, you may end up dumping more money into it before it’s ready. This can be a problem if you’re not equipped with the skills or the money to flip the property.
Do a little digging and figure out what the property taxes are like in the area. Good neighborhoods often have higher property taxes, but this isn’t always the case. The higher the taxes, the more they will eat into your profits, so it’s important to keep this point in mind.
You should also see if vacancies are the norm at other rental properties in the area. The more people that move in and out of a neighborhood, the more likely your units are to sit empty, which means you lose money. College campuses are notorious for this.
- How easy will maintenance be?
The easier things are to fix when problems do come up, the better. That’s why you should take a close look at how easy maintenance will be once you’ve purchased the property and it’s up and running.
A fancy Victorian may make for a beautiful rental, but you won’t be able to find an easy, affordable replacement for a stained glass window. Look for a simple building constructed out of basic materials. It will save you time and money.
You also need to consider how easily you can access plumbing, heating, and electrical systems. Houses built on cement slabs are notoriously difficult because many of the systems that need to be repaired are extremely difficult to access.
Although you may be excited to purchase a rental property, take your time and ensure that you find the right one. It will save you from painful headaches in the future.