The ultimate goal of investing in rental property is turn a profit. When you are shopping around for rental investment property it should be kept in mind that just because you find a property with a good price; that does not necessarily mean that it will make a good rental property. To make sure that you achieve that goal it is essential that you follow several critical guidelines. There are simply some properties which are more suitable to renting than others. This can be one of the most common mistakes many people make when they purchase their first rental property. By understanding which properties should be avoided, or at least how to handle problem properties, you can be more confident of your success.
First, always make sure that you check references. This can be a burdensome step that many landlords overlook if they feel as though they have a good instinct about the tenant when they meet with them. Outdated homes are a prime example of properties which do not make the best rentals. Not checking references; however, can lead to a number of problems. One of the main reasons that outdated homes do not often make good rental properties is the fact that they are simply more prone to have things go wrong with them. You can uncover a wealth of information about potential problems before you rent to a prospective tenant.
In some cases, this can turn out to be quite expensive. You will have two choices when dealing with an outdated rental property; you can either spend the money to update it and risk your profit or you can not update. Always make sure that you have everything in writing. This is to protect not only your rights but also the rights of your tenants as well. Everything from the code of conduct you expect tenants to abide by while renting your property to the rental application itself should be in writing. The latter is also quite risky as most renters, if they have a choice, will rent a property that is updated. Renters typically expect the properties they are renting to be safe, secure and have working systems and appliances. You will find that you have better success with your rental property if you take the time to ensure that it is both secure and clean. The grounds of the property should be free of clear and trimmed regularly. Not only will the property be more visually appealing but these actions will also assist you with property liability. Some of the main problems you may run into with outdated problems include plumbing issues, roof leaks, cracks and settling, electrical problems and the ability to obtain parts for appliances. You will also want to take additional security measures. Extra security may be able to lower your insurance premiums as well as provide an incentive to quality tenants to rent your property when they know it is secure.
Outdated homes are not only frustrating because they tend to have systems and appliances that break down but they can obviously be expensive in many regards. If you make the decision to hire a property manager, take the time to interview prospective candidates very carefully. Not only will you have to pay for the repairs but more often than not the repairs will need to be made when you least expect it and during the least convenient times; which usually translates to an even higher cost. Property managers can be quite helpful if you do not have the time to tend to all of the details yourself. The wrong property manager; however, can cause you tremendous problems. This means that you will need to hire a thoroughly responsible and professional individual to handle the job.
Location is always important when it comes to real estate and that is no different when choosing a rental property than when purchasing a home in which you will live. Always make sure that you follow all applicable regulations in the renting of your investment property. The Fair Housing Administration Act provides precise regulations in order to prevent discrimination.
Properties which are close to amenities such as shopping, schools, worship centers and are generally considered to be in a good neighborhood will typically make better rentals than homes that are located on busy streets or which are not near such amenities. If you violate those regulations you could find yourself facing a lawsuit that is costly in terms of time as well as money. The best course of action is to take the time to do your homework and consult an attorney experienced in real estate matters for guidance regarding the FHA as well as ensuring that you have the proper forms.
Therefore, it is always important to make sure you take location in mind when choosing a rental property because most prospective tenants will be looking for properties that are in good locations. If there is competition on the market, a tenant will often choose a rental that is in better location even if it means paying a bit more in rent.
Finally, make sure that you do not violate the privacy of your tenants. Check with your state’s regulations to find out whether you must provide any type of notice to your tenant before you enter the dwelling.
Following these guidelines will help you to retain quality tenants and avoid any potential legal problems.