Buying rental properties can be one of the most accessible ways for the average man on the street to accumulate wealth. However, caution does need to be taken as when dealing with property you are normally dealing with huge sums of money and consequently you are normally accumulating huge amounts of debt.
There is also things you need to know to enable you to determine whether a deal is good or not. Below are 5 points that are worth considering when looking at buying rental properties.
- You have got to know exactly what you are looking for. It is no use targeting every property in site from studio apartments to 5 bedroom houses. You have to have a plan and you have to stick to it.
They go into this in more depth in a book titled The Book on Rental Property Investing.
- It’s a numbers game. You have to be prepared to look at hundreds of properties to find a deal that meets your criteria and that corresponds with the strategy you have set out. This doesn’t necessarily mean making hundreds of phone calls a month to different estate agents or vendors.It could just mean spending 30 minutes to look through the Internet at properties on sale and out of the few hundred you look at you might only find 10 that meet your criteria, you then put time aside to explore the possible 10 in more depth.The Problem that many people that are new to UK Property investing have is that they expect to open any newspaper and find a deal straight away. It doesn’t quite work like that. You could get lucky, but this is unlikely.More likely is that if you are looking for below market value (BMV) properties is that it will probably take you a few months to find your first deal. Thankfully after you have your first one under your belt, they do tend to appear more often. “Sods Law,” I guess!
- You have to become an expert at accounting for every penny. You have to have calculated all your cost before hand, from mortgage costs and property management fees, to insurances to void periods. And you have to make sure everything adds up and you can afford it, and preferably that the property will be paying for itself (i.e. the tenants rent will cover paying the mortgage and all other expected expenses)
- Make sure you buy in a location that has a history of providing good rental returns. If there are very few other rental properties advertised in your location, then you need to ask yourself why that is.It maybe that the area is excellent for rentals and tenants tend to stay in their properties for years, or it maybe that there are no easy commuter routes to where people will generally be working i.e. the nearest city or town.Until you do some more investigating you will never know. Also make sure you are buying rental properties in a neighbourhood that is respectable enough so that your windows won’t be broken by vandals every other week. Look for things like good commuter links to the nearest town or city.Try and make sure the property is in walking distance from the nearest bus or train station that will take then directly to the nearest town quickly. Being by hospitals or Universities and good schools are also normally very good.
- Look for low maintenance properties, especially if you are just starting out. Flats can be great for this as you don’t normally have to worry about things like the building structure and problems on the roof to be fixed etc as this will be taken care of by the freeholder.
We could go on for ages listing tip after tip for buying rental properties, however that is not the purpose of this article. We just wanted to give you taste of what to look for and what to avoid.
Good luck! Buying rental properties is a goal that can be achieved by almost anyone; just make sure you acquire enough knowledge before you do so that you don’t end up making costly mistakes.**Nothing on this website should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional. In addition, because real estate laws change all the time and differ from state to state, and even city to city in the same state, everything in these pages should be considered general marketing advice and ideas. Please see link to full Disclaimer at the bottom of this page.