Buying a home for your own residence requires you to consider your needs and the specifics and features you want in your future home. But when you are buying a home that you will own as a rental property, the requirements can be a bit different as you look at the needs and wants of the tenant rental market. Here are some tips to help you buy a house that will make a great rental property.
Look For Rent Potential
There are certain variables with a house that will make it a good rental property, and some have more rental potential than others. If you are looking to buy a single-family home rental property, the type of neighborhood can improve your rental opportunities for the home. For example, if a neighborhood is mainly homeowners, this can be a benefit to your property because a lot of renters prefer to rent a home in a neighborhood where other neighbors own their homes. Ownership residence can make the area less transient and the residents there will be more aware of their neighbors to help reduce the potential for crime.
Be sure you consult with your realtor to let them know you are searching for a rental property and the type of property you want. They will be able to compile more accurate search parameters and can also help you to evaluate a home's rent-ability. They can help you evaluate a neighborhood for the types of schools, local businesses, or a university that will affect the type of tenant pool you will find in the area.
Consider Cash Flow
The cash flow of the rental property you buy is one of the most important features of a good rental. If your rental property is not generating enough income to cover its expenses, you will end up losing money and most likely have to pay for the extra costs out of your own pocket. This would not be a good situation. Ask your real estate agent to help you in your cash flow analysis on any property you are considering as a purchase. You will need to find out the property's taxes. Your real estate agent will have the tax amount from last year that will give you a good estimate.
You will also want to find out the condition of the property's systems and appliances, such as the water heater, HVAC, air conditioner, and plumbing system. If you are going to encounter any failing appliances and systems which require repair or replacement, this can cut into your cash flow. Your real estate agent can inquire from the seller the age of these appliances and systems and any recent work or repairs they have had. Then, your agent can help you calculate the mortgage payment based on your credit and income pre-qualification.
Reach out to a local real estate agent to learn more.