When chosen carefully, a rental property is a great investment that’ll bring you passive income over time. However, there are several considerations to pay mind to before making the leap, as you’ll want to rule out any property that has problems that’ll eat into your profits. Below, we’ll discuss the top things to check on a property before investing in it.
1. Location is Everything
While you will be able to strip the insides of any home and remodel them, you’re stuck with the location. Location determines several factors including upkeep costs, school districts, and value of the surrounding homes. If the home is on a large plot of land, that’s great, but that’ll also add maintenance and landscaping costs to take into consideration. Amenities such as a pool will come with their own costs and considerations as well. The school district that the home is in is also going to be another factor for buyers with young children, as will if the house is positioned on a busy road. If you’re looking at a property that’s in a prime vacation rental spot, you’ll also want to consider if you’ll have to hire a property management service.
2. The Bones of the Property
The “bones” refer to the foundation, roofing, floor plan, and plumbing that contribute to the value of the house. The first question to ask will be as to what the foundation of the home is made from and how solid it is. Understanding ICFs, wood frame, and tilt up construction is important in considering how the foundation’s wearing over time. The roof is another spot to check out, as replacing a roof can be very expensive. Whereas the siding or outside door trim can be replaced, the roof is a larger undertaking. Checking for cracks or sinking spots will likely save you money in the long run and can be something that you’ll be able to negotiate with the seller.
3. Aging in Place Features
Aging in place features are lucrative especially if you’re looking for a rental in a popular vacation spot. A first floor bedroom is always a plus, as it can be converted to a playroom or office if it’s not needed as a bedroom. Other features such as handrails, rounded durable countertops, and a shower with a seat will make the home a great rental option for families with members of all ages, whether they have elders or very young children.
4. Square your Finances Away
Understanding the repairs, upkeep, and insurance that’ll come with the property ensures that you decide on a property that you can afford. Landlord insurance is an essential if you’re going to be renting, and will protect you financially in the long run.
5. Previous Kitchen & Appliance Updates
Asking about when the kitchen and appliances were last updated is important, as an appliance upgrade or kitchen remodel can become quite costly. If the property happens to have updated or energy star rated appliances, you’ll reap the benefits without having had to front the cost.
An investment rental property is a great financial decision that can bring you profit if you choose carefully. By doing your homework beforehand, you’ll land a rental that’ll bring you a positive return.
Matt Lee is the owner of the Innovative Building Materials blog and a content writer for the building materials industry. He is focused on helping fellow homeowners, contractors, and architects discover materials and methods of construction that save money, improve energy efficiency, and increase property value.