What to know before you buy a rental property
While my standard advice is to buy real estate, it is important to buy right. In other words you need to do your due diligence before purchasing your next rental property. Some of the primary things to consider about the physical property are the location, unit mix, differed maintenance issues and repairs that might be needed now or in the near future. An inspection completed by a licensed inspector can be invaluable. By understanding the location of your property you will understand more about your potential renters and other properties that are going to be competing for those renters. What others in your area are charging will in large part determine the amount of rent you can charge. Other factors beyond location that determine the rent amount are amenities offered, square footage, age of the property, overall desirability and of course the supply and demand curve currently operating in the local market.
We recommend that you have a good checklist. We always advise our clients to call us first and invite us along during the inspection of the property – this is hugely valuable. It is of course important to take a look at the current income and expenses and not just take the real estate agents word in regards to the proforma numbers listed. Make your own projections over the next 5 years in regards to rents, expenses, property appreciation, etc…
Talk to the current tenants. Ask them a list of questions – believe me, they love to talk and will usually tell you a lot of things you should be taking note of.