Buying Rental Property Part 2
Welcome back! This week’s buying rental property part 2, we will cover some information about the property purchases. Our first blog covered some of the things to consider before investing. Before you buy you need to know a bit about the property! Personally, I use a checklist of things to check before investing, ensuring I don’t miss any important details. There are a ton of State and Federal laws that govern real estate investment and properties. Without making it a point, your Realtor is a vital resource and will keep you from a potential hazardous deal! If you aren’t working with a real estate agent, be incredibly careful when looking at investment properties. It really is a field where we earn our commission!
- Looking for the “deal.” For the most part, you get what you pay for when buying rental property! “Deals” don’t typically exist and there are many variations of properties that increase (or decrease) the value! Lets just create a small example: You purchase a new rental that was built 40 years ago. Good price, nice area, its a pretty good deal and your excited to start making money! A home built in the 70’s, will not be up to current code and you will need to make some adjustments! You need an inspection, peep holes in the front door, a dead bolt, reinforced front and back doors, etc. The above needed repairs are almost never updated and will cost around a thousand dollars. And that is just a simple home! Buying rental property isn’t a horror story, but you need to know some of the repairs/upgrades you will need to add to the property! You can email me for a list of things to check as well!
- More detail repairs. Most rental properties that you will look at need some form of repairs. Because of the competitiveness of the current market, it will be hard to get the seller to pay for any needed repairs! When you’re doing a home walk through, take note of potential repairs you will need to make. Does the home need a new water heater? Are the appliances very dated? Will the walls need repainted? Knowing the general costs to install typical appliances will help you stay out of trouble when buying rental property!
- Don’t forget about your taxes! We all love paying property taxes every year! When looking at different rental properties make sure you check the property tax costs! While typically not unreasonable, sometimes the taxes will need to be reevaluated, and your home owners insurance will change rates depending on taxed value! The property tax will be included with your real estate packet, and if your on your own you can request one.
Most of the things you need to check for a rental property purchase are experience based. Make sure your Realtor is experienced with real estate investment, and they will take care of all the reporting and “checks!”