Should you purchase a rental home that’s been previously occupied by tenants? This is a big decision because it could turn out to be a dream investment or a nightmare. It’s important that you take the time to consider a few things before jumping in with both feet. Below is a list of several things to think about while looking at whether to invest in a rental property or not.
1. What Is The Condition Of The Home?
Sinking your money into a rental property is a big deal, so you need to check the condition of it carefully before buying it. You’ll find that some rental properties are poorly maintained, while others are not. Some tenants treat a rental as their home and will make small enhancements such as planting flowers, applying a fresh coat of paint, or adding new appliances. On the other hand, if a property has been rented by multiple tenants, or it has sat unoccupied for a while, problems are bound to exist. Be sure to check the property inside and out to make sure it’s worth buying.
2. Can You Tour The Property When The Tenants Aren’t Home?
The best time to walk around the property and look for potential problems is when the tenants aren’t home. This way, you can look inside cabinets, under rugs, and behind furniture to inspect the home thoroughly. Be sure to check inside and outside the property before finalizing the deal. You should be able to see easily how well the property has been maintained.
3. What’s The Neighborhood Like?
The surrounding neighborhood is an important factor in whether you should buy a rental property or not. Look at the other houses in the area. Are they single-family rentals or multiple-unit rentals? What about any shared amenities in the area? Are the parks clean, and the parking lots well-lit? Checking these things will help you determine whether you want to buy a property in that neighborhood or not.
4. How Long Has The Rental Remained Unoccupied?
While a rental that’s unoccupied at the time you buy it is much more convenient for you, it could signal major issues with the property. There’s a reason a rental remains unoccupied for a long period of time, and it’s usually because it needs major repairs. Check for things like a leaky roof, broken pipes, and pest infestation before sealing the deal on an unoccupied rental.
5. Who Will Manage The Property?
Managing a rental property is a lot of work. If this is your first one, you probably have enough time to manage it yourself. However, if you find it difficult to handle all the duties of being a landlord in addition to everything else you must do, you might want to consider hiring a property management company. While doing so cuts into your profits, it’s worth the fee (up to 10 percent of the monthly rent collected) to not have to worry about it.
Buying a rental property is a huge undertaking that could be the best investment you’ve ever made, or it could be the worst. Doing your homework and making sure everything checks out before buying ensures you don’t end up making a bad investment. Use the five things you should consider before buying a rental home above as a guide to making an informed decision.
