I get this question alot. “I want to find a good rental home, can you help me.” To tell you the truth this is only a piece of the information a REALTOR needs to find you your perfect property. There are a lot of factors involved when buying a rental property and many of them pertain to preferences or needs of the investment firm or future land lord.
Some helpful tips I’ve gathered will help you decide what type of property you could purchase.
What are your income needs?, are you looking for a windfall on the long term – subsidizing improvements or merely covering some expenses through rent? If so then this will determine the type of property you can purchase. Some people like a few hundred bucks every month from rent – so an investment property with less maintenance that is more “move in ready” would be the ideal solution. If you are a cash buyer – perhaps a multi-family property or a couple of small fixer-uppers to spread out the equity. There are a number of ways to make this successful.
What is your tolerance to risk?, there is risk in every investment. Anyone who tells you different would be lying. That’s why it’s an investment. Think about it – when you invest with a financial advisor – they give you a test to find out how well you can tolerate the ups and downs of the financial markets (this saves them some hour long scream sessions and helps them invest your money effectively and at your comfort level).
Do you have the time to maintain it, show it, and solve tenant complaints?, this is a serious question. Being a landlord is a business with serious legal consequences if you do not handle certain situations appropriately. If you do not have the time then perhaps a property manager, or less involved form of property management is for you.
To answer the question – what to look for? Look for something that fits your needs, income requirements and most importantly time requirements. You do not want to find yourself leaving your job (that pays the mortgage on your residence AND investment property) frequently to service or show your rental.
As for the features, this falls into the risk question. Personally I like homes that need work. I can maximize potential, my carrying costs are usually lower and I can always find good tenants by offering a competitive rent price.
If you have any questions – please feel free to contact me.