When you are looking to buy an investment property, there are some things to consider if you’d like to get the top rent. Some things you may know from buying your own house. But there are some factors that you need to consider when you are buying a home that someone else might live in. Your real estate agent is going to be your main source of information, especially if you are not in the area to actually see the property.
Make sure your real estate agent is looking out for your best interests. To do so, make sure you ask about these factors; some of these items are innocently overlooked, others may be dismissed if you don’t ask. Make sure you clearly communicate with your real estate agent what is important to you and the attributes you are looking for in a property.
Location, location, location.
It’s not just the city or town, or even the neighborhood that you need to consider when buying. If you are looking for an investment property that is going to be easy to rent so that vacancy is not an issue and get top rental price, you will have to consider the traffic in the area. Is there traffic noise? Is it easy to get in and out of the driveway? Is it easy to get in and out of the subdivision? Can you make a left turn? What businesses or attractions are in the area that might affect traffic during the day?
If you have an investment property, the person or people that will live there may live very differently from you. There might be multiple roommates, children of driving age, someone with a separate personal and work vehicle, etc. who will live in the property. Consider the parking situation when examining a property. Is there a private garage or driveway? Are there marked spaces? How many? How easy is street parking? How far away is street parking from the front door? We had a beautiful updated townhouse take longer than average to rent because there was no garage and only one designated parking space and street parking being quite far from the front door, depending on the arrival time home. Inside the property was gorgeous and could sell itself, but because almost every prospective tenant was not planning on living there alone, parking was an issue and rent was reduced in order to fill the vacancy. Parking matters to tenants.
This one might not be so obvious at first, so make sure to ask. You are buying a property that people will live in and people have stuff. Some people have a lot of stuff, and they want a convenient place to put it. If you can supply that convenient place, you can attract some tenants and possibly save yourself some vacancy time. Make sure you ask about this if you are looking at a property in any community area that is designed for families. Though fair housing ensures that anyone, single, married, with or without children can live in any home they like, if you are looking at a property that is attractive to a family situation, make sure there is some storage space. The prospective renters will be looking for it.
When you open your eyes, you’d like the first thing you see to be something pleasant. Real estate pictures will focus on interior pictures unless there is a breath-taking panoramic picture right outside the window. Ask for your real estate agent to send you pictures of what is outside the windows. If you are going to look out at a dilapidated junk yard or decomposing barn or a solid brick wall of a neighboring building, you might be surprised when you can’t get the rental price you’d like or if your property sits vacant when all else seems to be in order. Even if you are in a nice neighborhood, zoning in the Treasure Valley is interesting and even new construction can border just about anything.
If your real estate may hire professional photographers or stagers to make the property look its best. They may have artificial lighting or wide angle lens that makes the space look brighter and larger than it actually is. Make sure you (or your real estate agent) look at your property more than once at different times of day to see how it look inside. Natural light is important to many people. It may not be a make it or break it issue, but definitely something to consider.
Know about the HOA.
Know what the codes and expectations of a property are–are they stringent? Do they seem excessive or limiting given the location of the property? What is the procedure and timeline for remediation of an HOA violation? As the homeowner, you will be the one receiving the violation notifications for behaviors of your tenants. Make sure you know so you can have an awareness of the ability of an un-invested tenant to fulfill them. Save yourself a headache and ask about the HOA rules and regulations. Also know what the fees are. HOA fees can quickly make a good deal sour. Know before you buy.
Separately metered utilities.
Tenants like when utilities are included; but as an owner, that creates more work. It may be difficult to accurately charge the tenants to make sure your costs are covered and not over charging the tenants. Depending on your property management company, you may have to pay extra to have them manage tenant utilities (Prestige Property Management is a full service management company. We do not have any hidden fees for services). You must also consider fair housing rules when creating a pricing structure to ensure that it does not discriminatory in any way. To simplify your life, ask if the property has separately metered utilities and have the tenants and utility company do the work of managing the utilities.
Renters are looking for a place to call home. For many, that includes a yard space that they can call their own. If you can provide a private or secure outdoor space, you will have an easier time renting your property and keeping good relations with your neighbors (or among the tenants, if you are purchasing a multi-family dwelling). Also consider the size of the yard, especially if you are requiring the tenants to do the maintenance. There is a “sweet spot” in terms of size–too big or too small of a yard space can be a deterrent to some prospective renters. Though you will not be able to please everybody, you will cast the greatest net of potential tenants if you are able to offer some private outdoor space.
Having an investment property can be a very rewarding enterprise. If you can find a property that can enhance potential tenants’ lives with easy parking, easy access to attractions and businesses, views, and other amenities, then you can reduce vacancy and get top rental amounts. Your real estate agent will help, but make sure you are asking questions in order to get all the information you need to get the most from your investment.
Do you have questions about property management? Give us a call. We would love to help you get the most from your investment property.