Tips To Consider When Buying A Family Home Rental Investment
Posted on: 18 August 2017
Buying a family home to rent out as an investment property can be a challenge, but can bring you positive cash flow when you know what to look for. As you search for properties with your real estate agent, use these tips to help you search for and buy a profitable and successful investment rental property while you help provide quality housing for the community.
Research Market Rents
The first item you want to handle when beginning to look for a property to buy is to find out how much a home in the area can rent for. This will help you determine how much rent you can expect each month to cover your fixed expenses on the property.
You may want to focus on a specific type and size of home to begin your research for market rents. For example, you can choose to focus your research on rental homes that have three to four bedrooms and two bathrooms. Then, you can look online at local rental management properties or in the classifieds to find out what the asking rent is for these types of homes.
Search For a Profitably-Priced Home
Now that you know what the market rents in the area are going for, you can begin looking for homes and complete a cash flow analysis on their potential profitability. You will want to make sure the rent you can charge for a property will cover the debt payment on the property and any other expenses. Talk to your mortgage broker to find out how much your projected mortgage payment would be on a property. You can talk to your insurance agent to get a quote on home owner's insurance.
Complete a cash flow analysis by subtracting all the expenses from the potential rental amount. You should have money left over after all your expenses are paid. Be sure to calculate costs, such as property tax, home owner's insurance, monthly water and sewer bills, repairs, and any other expected maintenance. After you have completed a cash flow analysis on several properties, you may begin to get a good idea of a profitable purchase price on a home.
Look For Rental-Attractive Features
As you are looking at homes, keep in mind specific features and amenities on a home that are attractive to renters. Providing various features with a rental property can attract a wider market of prospective tenants and increase your chance of finding a good tenant.
For example, buying a rental home that has several bedrooms and bathrooms and has a fenced-in yard, can make it attractive as housing for a family with pets and can open up the possibilities to those with multiple people living in the household. Then, buying a home with a garage will make your rental home more attractive, as many people like to have a place to store their vehicles, outdoor equipment, and power tools.
Use these tips to help you look for a family home to buy as a rental property.
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