How Do You Find The Perfect Rental Property?
There are a lot of difficult choices to make when becoming a landlord. The kind of tenants that you want, what type of landlord you want to be, whether or not to make it your full-time occupation. But above all of these choices there's one that stands out as perhaps the most important of all: what sort of property do you want to rent out? This can seem like a pretty obvious and simple question, but it's actually deceptively complex. There are a ton of hidden choices that you've got to make mixed in when trying to find the right property. Not only that but those choices tend to be pretty much inseparable from each other. The kinds of tenants you want will impact the type of properties that you invest in. As will the decision of how much work you actually want to put into it. It can end up being a pretty daunting task, especially when you're just starting out on your real estate journey. Fortunately, there are plenty of things that can help you narrow down your choices of properties to make the decision much easier. Here are some of the most important things to consider when trying to find the perfect rental property.
One of the biggest mistakes that a lot of landlords make is that they see a cheap property and immediately assume that it's going to make for a fantastic investment opportunity. The problem here is that they often fail to realise the level of work that they might end up having to put into maintaining that property. You need to ask yourself, why is this property as cheap as it is? There are a whole variety of potential reasons for this. It might come down to the area that it's located, more highly sought after areas are obviously going to be more expensive. But the other major factor is the properties general state of repair. A more expensive property might seem like worse value based on your initial investment, but it can end up saving you a lot of money over time. This is because it could well require very minimal care and maintenance. On the other hand, a cheaper property might seem like a great deal, but if it's not been well cared for, then you could end up paying far more in the long run on repairs and general maintenance. Always be sure to have a full check of the property done to assess what kind of condition the property is in before you put down any money.
The one thing that a lot of landlords tend to ignore when it comes to choosing the location of a property is the impact it can have on the return on their investment. As previously said, properties in less popular areas will be cheaper, but this will often mean that the rate of your rent will have to be lower as well. Often these properties attract lower income tenants. If you're hoping to attract higher income tenants or rent out a triple net property, then you're going to want to look in areas that are generally considered higher quality. This will mean that the properties are probably going to be more expensive, but you could well end up with a far greater return on your investment in the long run.
What kind of tenants do you want?
The type of property that you invest in will have a big impact on the kinds of tenants that you attract. Newer, better-maintained properties will often attract families and higher income tenants. People like this are generally more likely to take better care of the property itself, lowering the chance of you having to deal with any damage. However, they are often more likely to request specific changes and assistance from you. On the other hand, if your property is a little cheaper and perhaps doesn't as many features, then it might make the perfect student property. Students, as a rule, tend not to be quite as committed to taking care of a property as a family might be, but they are also less likely to request as much assistance. You simply need to decide whether or not that tradeoff is worth it. Certain tenants are also less likely to rent for a long period. This comes with both benefits and drawbacks. The property market is constantly in a state of flux. This means that you might find yourself needing to charge higher rental rates in order to cover your own expenses, and with a long term tenant, this can be difficult. However if you find yourself with new tenants on an annual basis, then raising the rent on your property becomes less of an issue. The choice you have to make there is whether that is worth the risk of having a property that is empty for longer periods then if you had a long term tenant.
Think with your head, not your heart
There's a temptation when you're trying to find a buy-to-let property to choose a place because you personally really like it. The thing to remember is that you're not buying that place in order to live in it. A buy-to-let property is an investment, nothing more. By choosing a property that you personally would like to live in, you could end up buying somewhere that isn't going to give you anywhere near the return on your investment that you would like. Make sure that you take a detached approach to your investment in order to avoid making an impulsive decision that you might come to regret. You should even consider using the services of a financial advisor so that they can offer impartial advice as to whether or not the property is a smart investment or not. The last thing you want is to end up with a property that is delightful, but is also a complete money pit.