Sean Glynn
Download list of important steps when purchasing and managing a rental investment property at Agentxo.com!
Feel free to email me any checklist ideas at Sean [at] Agentxo.com!
looks at Jobs, affordable cost of living, and favorable home prices to rental costs
Each type of property has pros and cons. Single family can be beneficial, although multi-unit locations offer the benefits of economies of scale.
Remember, your focus on a rental property should be durability. Of course, it should be clean and presentable, but try to avoid purchasing premium products that can't sustain "wear and tear" from tenants.
Such as a mortgage, property taxes, property management, maintanence
Will you be managing the property yourself? If so, make you are up to speed regarding tenant laws in that area.
If not, make sure you are aware of the costs of property management, often around 10% of your gross rental income. Also, ask the management company what is the typical cost, time frame, and process for a tenant eviction, just in case.
Your accountant can offer guidance on different tax-related information, including benefits, of a particular purchase/investment. (Make sure you are working with an accountant who has experience with real estate investments.)
Many title companies have an online calculator to estimate closing cost. Search online for one in the state for which you are investing.
How long will it take to rehab, if necessary? How long until a tenant is placed?
Often, a "tenant placement fee" is charged by your property management team and is a portion from your tenants first month's rent.
Check sites like Rentometer to gain a sense of local rental rate for properties of your size. (Don't be afriad to ask the real estate agent for comps, as well.)
Websites like Redfin have options that help you find recently sold comparables in your area. Plug in your properties address and make sure you are comparing apples to apples when looking at other properties (including bedroom, bathroom, sq. ft, distance from target property, and sale date).
You can also ask the representing real estate agent for comps, as well.
How are you paying for the property? Traditional loans may require 20-25% down, and be sure your lender to ask about any and all costs you will incur at closing. If it's a good deal but you don't have the funds, try advertising it to other investors, to see if there are joint venture or private lending opportunities.
Background checks, credit history, and contacting former landlords are a great way to gain a better understanding of any potential tenants. If using property management, make sure you are aware of their process.
If you're planning on using a property management company, talk to them about potential property management procedure they have found successful. For example, how long of a "grace period" will you allow for a late paying tenant? Will you apply a daily late charge? Do you want to use financial incentives if they provide on-time payment for a certain number of months?
Of course, these questions are just as important if you are handling property management yourself, and you may want to seek recommendations from other investors/landlords in the area.
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