Posted by BillW. on March 13, 2001 at 22:39:18:
Mike, Look for seller motivation. If there is none of that, the rest of the stuff doesn’t matter that much. If you find some, then check overall condition and income and expenses. Then ask more questions here.
BillW.
Purchasing Rental Property - Posted by Mike ¶
Posted by Mike ¶ on March 13, 2001 at 22:17:56:
I stumbled across this discussion board a few months ago and have found the questions and answers to be extremely helpful. I do not currently own any rental properties, and I am going to look at my first potential property in the next day or two. I would really appreciate it if I could draw on your experience to find out if there is anything I should be looking for on the walk-through. As I said, I don’t really have much experience in this type of thing, and thank you all for your input.
Mike ¶
Re: Purchasing Rental Property - Posted by Earnest
Posted by Earnest on March 14, 2001 at 09:11:13:
Both Frank adn Bill are right. Especially Bill. Price and terms count a lot.
A couple more things:
If its multi-unit, be aware that upstairs units in 2-, 3-, 4- units are valued less, harder to rent, and you may have to settel for a lower rental rate.
Having washer/dryer hooksup is
important. Its harder to rent, adn rental price would be less if they are not.
Be on the look out for poor maintenace. Former landlords may have cut costs with cheap, less competent repairs. SOmetimes renters have done repairs that are poor or unprofessional. Many do-it-yourselfer’s are not.
Zoning: don’t miss checking this out, and check out city ordinancces aw well regardign utilites, parking, water-run off, etc.
2BR homes, if it’s a singel unit, will appreciate much slower if at all than smaller units. Some say never by 2BR homes. 2BR apatments as part of a larger unit is fine, though.
The neighborhood is a double-edged sword. In smaller municipalities properties in neighborhood where everything else is rental lunits is of less value both in terms of rent amount and resale value. Rental units in a neighborhood where there are no other renters can bring problems too. Home owneres tend to look down their noses at renters adn don’t appreciate the owner rnting the property. So, a simgle family home in a neighborhood where there is a lot fo renting will not appreciate as much; multifamily units are designed as rentals, so there is less of a problem. In neigborhoods where there is littel/no other rentals a multi-unit is not appreciated by the neigbors, but a singel family home will appreciate more, expecially if you intend to sell it sooner or later.
How easy is it to Rent ?? - Posted by Frank Chin
Posted by Frank Chin on March 14, 2001 at 08:00:06:
I own a number of rental properties - so I’ll give it a shot.
The key consideration is how strong is the rental market? We gauge this by going to local realtors posing as a potential renters describing a place we want. We describe it exactly like the place we’re thinking of buying. If we’re told that there’s hardly anything available, and they’ll put you on a waiting list, then its good news. If they have dozens available to show you that day, its not good news. In that case, look at a few. We also ask for the rental price while we’re at it.
We also go the local realtors and describe a place we have and if they have any renters waiting. We ask for the rental price. We compare this the one above where we pose as renter to see if we get the same reaction. Sometimes my wife pose as the renter and I pose as the owner.
Also check the local papers and visit some rentals. See what the deal is. Ask when the last tenant left and how long its been on the market. If they been looking for tenants for months, then its not good news. There’s your competition.
Another consideration is what renters are looking for in the area.
1- If its 3 plus BR’s then its a renter with kids. They want to know about the school system.
2- If its 2BR then its a professional couple or a older retired couple. They don’t like to do yardwork etc. So are you close enough to handle it?
3- For 1 BR units, prepare for a higher turnover rate. Do you want to look for tenants every year (or after 3 months)?
4- Accessabilty to public transaportation is another frequent question. Some renters try to get by with one car (to save for a house) so they want to know if they can walk to a bus stop. This is a key consideration in urban areas.
After that, you’ll have to figure out if the rent can cover the mortgage, and can you do a no money down deal etc. But you have to determine if you can rent this place out to begin with.