What Properties Make the Best Rentals? A Checklist for Real Estate Investors

Posted by Chris Clothier on Mon, Jun 20, 2016

rentalproperty-checklist-investproperty-realestateinvestors.jpgWhat makes an investment property ideal? What makes it a dud? There’s certainly a science to it, no doubt — there are factors that will set your property up to be a passive income powerhouse, while other things may turn it into a money sink.

Seasoned investors no doubt know these factors like the back of their hands, but new investors may struggle to properly evaluate a property. Even those with experience may make the wrong call once in a blue moon, because you can’t always predict people.  The factors that make a particular property good can vary as well and they can change.

That said, what are the factors to look for in an investment property that will give you, as a real estate investor, the best chance for success?  We sat down to compile a list today of some of the top factors to consider.  While this list may not be exhaustive nor 100% complete (there are always x factors to consider), this is a great start and a Turnkey investment property company like Memphis Invest will always be a place to start your search at a minimum if you are a passive investor.

Take a look at the list and let us know what you think...

Single Family Rental Properties: A Checklist for Success

Property Management

I put this on the list first precisely because it really plays an important part of the success of your property.  The property itself has nothing to do with the management, but where the property is located and the particulars of the neighborhood are going to play a big role in whether or not a quality management company would even want to manage the property.

The best property management companies make good properties perform great by being lazer focused on managing the right properties in the right parts of town.  This applies to Turnkey companies as well.  The best companies will taylor their services to the properties that fit within their expertise and will never try to be all things managing all properties for all investors.

Be aware that you have a great property manager who is smart enough to limit their services to the exact type and style of property that you want to own.

Neighborhood

Obviously, location is a huge factor in anything related to real estate. For your investment properties, the location goes beyond, and then comes down to, the neighborhood. Obviously, the state and city play a role; as local economy, population growth, and similar factors can play a big role in the overall success of your investments.

When it comes down to neighborhood, its quality plays a role in the kind of tenants you’ll be bringing in.

Things like vacancy rates in the neighborhood and surrounding home values may also impact your property and its ability to generate positive cash flow! Also consider other factors—is it close to a college or university, which increases the likelihood of student tenants, which increases turnover rates and summer vacancies? These are things to consider.

Job Market

Broader, but no less important: is your property near where jobs are? If people are coming to work, people are coming to rent. If a major company is moving in or building a factory for example, look for properties within a 30 mile radius or so. People go where the jobs are.

Crime

One of the more obvious things on this list is to avoid high crime areas. Both the police and public libraries should have records of crime in the neighborhood, which are more reliable than asking the person you’re trying to buy a property from. You can also look for signs of vandalism and abandoned properties that could house squatters. See, too, if the neighborhood has a Neighborhood Watch program and how frequently the police patrol the area.

Amenities

While single-family homes don’t have amenities in the same way multifamily properties do, what they can have is proximity to great amenities. How close is your property to shopping, restaurants, nightlife, and parks? Is it convenient for grocery shopping? Interstate access? Think about these things.

Layout

First things first: layouts are not permanent. They can be changed through renovations. That said, such renovations can be expensive. Why does layout matter, you ask? Some homes, particularly older ones, can have very strange layouts that can just be downright off putting to tenants and, down the road, buyers. If the layout doesn’t make sense, it can be difficult to live with and live in, which may deter tenants from staying. A harmonious living space that makes tenants feel comfortable and convenienced—not confused—is ideal.

Space

Ideally, we keep tenant turnover down. We also recognize we’ll have multiple tenants in our time in a given property, and those tenants will have different needs and sizes in their families. Does your property have enough space? While you don’t need a property with a six bedrooms and four bathrooms, chances are a one bedroom property isn’t going to be enough for the vast majority of tenants.

A property with ample space to accommodate the largest pool of tenants is ideal. Between two and three bedrooms is typical, with at least two full bathrooms.

Condition

Some property defects are acceptable. Superficial damage can be fixed, and even small repairs and renovations aren’t a big deal. But there are some problems that should bring you to pause: significant foundation problems, severe water damage, dangerous molds, or structurally unsound or unfinished properties are all reasons to bail unless you’re a flipper. Don’t take on a massive renovation when you’re looking for a buy and hold investment.

Aesthetics

No, your investment properties don’t have to be pristine, high-end or even particularly beautiful to be profitable. But aesthetics still play a role and curb appeal still matters in attracting and  keeping tenants. Ensure that your property stays neat, attractively painted, well-maintained, and clean.

If you want to take the guesswork out of acquiring properties and want to dive straight into earning passive income, turnkey real estate investment is for you!

 

Companies like ours either already have properties ready for acquisition, or have the experience in the markets you want to be in, so we can guide you in selecting the perfect properties for your portfolio.

 

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Topics: rental properties