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Has anyone here ever purchased a rental property? I'm considering purchasing a single-family home and I'm curious how someone selects a specific property and a specific neighborhood/location.
Selecting the property itself seems fairly straightforward: work with a realtor to find a house within your budget and make sure it doesn't have any major issues. I know what I'm looking for: a house that is move-in ready and doesn't need a whole lot of fixing up. Obviously, there will be upkeep costs and I'm realistic about that. What I really don't want is to purchase a 200k house and find out I need to replace the entire foundation for another 50 grand. This seems like something a realtor can help me with especially if the house has publicly available inspections.
I already have a general idea of the location where I want to buy. I have family who live close by and they would be able to help me manage the property. But even within a 5-10 mile area, I'm thinking there must be criteria for selecting a better neighborhood than others. Obviously cost comes into play here as well, but without spending a lot of time on the ground, I'm unsure how I would select a location where the house *at least *retains its value.
Any input from those with rental properties, especially those who own in a different state, would be appreciated.
I haven’t personally owned a rent house, but I have both gotten fairly far along in the process and had fairly close relatives who owned them. So-
A real estate agent can tell you how much rent you’ll be able to charge in a particular neighborhood. You can use a mortgage calculator(add ten percent for loan fees) plus publicly available data for taxes and insurance to guesstimate costs. Run the numbers, then run them again.
Your tenants will damage your property. Expect to have to repaint and change the carpet before a tenant, and in between tenants at the very least. White collar tenants are hell on the plumbing, blue collar tenants just damage shit(walls and the like), both of them need an exterminator all the time, non-gypsy euro immigrants are the best ones. everyone has HVAC emergencies and service techs are less honest than usual with landlords. No tenant will do maintenance past mowing the lawn. Do not allow your tenants to have male dogs.
Check tenant rights law and what you’re required to provide+what recourse you have for nonpayment. Make tenants undergo a credit check, have renters insurance, and provide a deposit.
Rental agencies can help you find better tenants, but factor in that they’ll take a cut of the profit. If they tell you not to rent to a certain tenant, don’t accept the inevitable sob story.
Home inspections are your friend. Use an inspector, ideally more than one.
And finally, remember that owning a rent house is a job, not a source of passive income like a dividend paying stock. You do have to invest time and work into it.
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