In Part 1 of this two-part blog about evaluating rental properties, we discussed how to do the research necessary to know whether or not now is the time to invest in rentals. We provided some important considerations to take when deciding if a particular area was worth investing in. In Part 2 of this series, now you’ll have to move on to evaluating the actual property and see if it seems like something worth investing in. These features of a potential rental influence both the investor’s property value and also the tenants who are looking to live there, so it is very important to consider the overall property prior to making that final decision.
The saying is true and location is everything. Homes on busy streets or near congested highways may turn away potential tenants who would rather be in a quiet neighborhood. Properties that are close to noisy railroad tracks also can send tenants looking elsewhere for housing.
What are some fun attractions or recreational activities within the area such as parks, malls, restaurants, the beach, movie theaters, entertainment venues? If the home is located in a gated community, will the higher price point reflect the amenities offered to residents such as a gym, club house, swimming pool, or tennis courts?
Good schools will attract more families to the area and will also drive up your property’s value, especially down the road if you ever decide to sell it. See if the home in the market you are interested in made it into this recent study of 2017’s Best School Districts in America.
4. Crime and Security
Tenants love feeling safe and anything an owner can do to make them feel more secure will go a long way. Consider installing alarm systems or security cameras around the property for added protection.
Tenants appreciate homes that allow them to keep their privacy. Inside the home, simple things such as installing blinds or curtains on the windows or shutters on the exterior can help. Putting up a fence or hedges can also double as both a security measure and a bonus for added privacy outdoors.
This is equally beneficial for both tenants and investors as well. A home that has already been updated may cost a bit more in the initial purchase, but it will save money in the long-run. Ancient appliances and outdated kitchens and bathrooms could lead to more money spent later on when things start to break down from the wear of tear of tenants. Renters also prefer more updated homes and are usually willing to pay more for nicer renovations.
7. More Than 1 Bathroom
This particular feature will depend on who you are trying to rent to. If it is a single person, then having more than one bathroom may not matter to them. However, many tenants may not want to have to fight over the bathroom in the morning or have to share the bathroom with guests. Additionally, it can be much better for resale value later if a home has more than one bathroom in it, so try and find a home that has at least both a full and half bath.
8. Carpet vs. Flooring
Having a home that is covered in floor to ceiling carpet may not always be the best option. For tenants, it means more maintenance to keep it vacuumed and clean from stains and dirt. For landlords, although it may cost you more to put in flooring initially, you’ll most likely save in the long-run from having to replace the carpet each time the tenants move out.
9. Storage Space and Garages
Providing your tenants with that additional storage could make all the difference for them. Tenants, especially those with families, will love having storage space on the property that they can use, and they will appreciate a garage to keep their car in and other belongings.
10. Laundry Facilities
This may seem obvious, but there are still homes today that do not have a washer-dryer for tenants. Save renters the trouble of having to trek all their clothes to a laundromat and install a washer-dryer in the home. Even better, if you can get it out of the garage and into the home itself, whether in a laundry room or closet, this will really bring an added appeal to your rental property.
Crunch Those Numbers
Once you’ve chosen a home that you feel meets both your needs as a landlord and will appeal the most to your future tenants, now is time to play the numbers game. Strap on your finance hat and start calculating. You’ll need to figure out how much you are willing to pay for the purchase price and for any renovations needed to be done. For a long-term rental property, you’ll have to charge rent that is fair for the area, otherwise you could have difficulty attracting tenants. Also, to earn a monthly profit, it is important that the rent is enough to cover a mortgage payment, any property taxes, insurance costs, or association fees for the home and still earn a good return.
When you are comfortable with all the numbers, it is time to prepare for the purchase of this next great investment.
LendingOne is a leading direct private lender in the country with fix-n-flip and rental loans designed specifically for real estate investors. Apply today and start growing your real estate rental portfolio with LendingOne.