There are many decisions that come with being a rental property owner. You need to decide if you’ll manage the property on your own or if you’ll use a property management company. But even before that, you need to make sure you don’t buy the wrong property. If you avoid the pitfalls outlined below, your chances of trouble free rental income will be much higher.
So let’s take a closer look at some of these issues that you’ll want to be sure to avoid now.
Avoid renting town homes houses or condos
Single family dwellings can be a lot more trouble, and a lot harder to turn a profit on, than multi-family units. With a single family home, if it’s vacant, it’s always 100% vacant. If you always have to be the person there to meet the handyman or plumber or carpet cleaner because there is no one else to do it… you’ll get burned out quickly.
Furthermore, if you are trying to show the place to a prospective renter and they don’t show up… you just blew your day. The point is, with a single family unit, it’s basically “all or none” when it comes to taking care of things and having money coming in.
So I find the best thing to do is on single-family residences, is just sell them and buy a four-plex. That way you can give one of the tenants a quarter off the rent and they will do all that for you. They will be able to open the property for the handyman, painters, carpet cleaners etc. And you can also have somebody to show the other units for you.
Avoid flat roofs because they only last a few years. If, for example, cable people and children walk on them to get their lost balls or whatever, while inclined roofs will last up to 20 years, flat roofs may only last a few years.
Donât buy properties where you pay electricity or gas, because you canât charge anyone anymore rent for them.
When you get a tenant where you pay the water, the electricity and the gas, it’s easy for them to move in it’s easy for them to move out. So any little thing and they move out you get more vacancies. So those types of properties you have higher expenses and higher vacancies.
Avoid properties that are multiple stories.
If you have two, three, or four stories you have more plumbing problems because a plumbing leak will destroy the unit below it. Also, something to keep in mind regarding three and four units in places such as Los Angeles; three and four story buildings require you to have a working elevator and the fire department will come out every six months and check for fire sprinklers, fire doors and make sure everything works, and if it doesn’t, they give you a ticket. So it’s just a lot more expense and a lot more hassle.
Don’t buy a property that’s next to an alley or main street
People often sell drugs in alleys and on main streets you have a liquor stores and bars and it attracts the wrong crowd.
Don’t buy a property to rent control area because the rent control can make your life miserable with all sorts of rules, regulations and inspections.
Donât buy a property that needs major construction, like a property that was half burned down. It’s a lot easier to just buy the property that only has minor cosmetic repairs that are necessary.
Don’t buy a property that’s a hundred percent vacant because this attracts the city to come out and remove your electric and gas meters and force you to do all sorts of inspections before they’ll give you back the gas and electric meters and let you rent the property.
We hope these tips have given you some good insights into the kinds of things to look for, and what to avoid when buying a rental property.
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