I was recently quoted in a Fit Small Business article about how to buy your first rental property.
You can click on the above link to read the complete article. But, here are two time-tested tips on buying a rental property along with some extra commentary.
When You Buy Your First Rental Property, Basic Is Better
Basic is always better when buying a rental property.
That’s because the more variables there are, the more things you have that can go wrong.
For example, a ‘plain vanilla’ house with very simple landscaping and inexpensive fixtures & appliances presents less of a risk to a real estate investor than does a luxury home with everything high-end, including a pool and a spa.
(Buying a condo to rent out is also a good option, but there are certain items to be aware of with this type of investment.)
While it’s true that a luxury rental will command a higher rent, there are also more things that can go wrong and more expensive repairs.
Often times, the bottom line or net income is exactly the same with a basic rental than with a luxury rental house.
Buy Where Renters Are
This is a common-sense item that buyers often overlook. They get so caught up in the house itself but they forget that they’re buying the house to rent out, not to live in themselves.
An easy way to know where the home renters are is to look in an area where there are a lot of apartment buildings.
Apartment developers and managers have already done all of the market research, so that you don’t have to.
Plus, when you have a rental house in an area where there are a lot of apartments, you’ll be able to rent to people who want to ‘move up’ from apartment living.
Even if you already own a rental house or commercial property, it’s always good to go back to the basics every now and then!