What To Look For In A Long-Term Rental Property
By Paul Esajian on June 15, 2018
There are a handful of important items that go into the perfect long-term rental property. Many investors think they can transform any property, throw a “for rent” sign on the front yard and wait for rent checks every month. This may work for an isolated lease, but if you want consistent long-term rental property success their certain items you should look for. These items will help increase demand, which will fill vacancies and allow you to get maximum rent price on every lease. Instead of looking solely at the list price you should look for a few hidden items to help form your decision. Here are five items to look for in an ideal long-term rental property.
- Right market/neighborhood. Buying a rental property solely based on the purchase price is often fools’ gold. The numbers may work on paper, but reality will tell a different tale. The single most important factor in any rental property is the location. Getting a great deal on a rental property in the middle of nowhere doesn’t do you any good. You will struggle finding tenants and managing the property. On the flip side if the property is in a good location with a strong market, renters will want to stay in the house as long as possible. You always want to look for markets that appeal to as wide a range of people as you can. A rental that appeals to a young couple as well as a family with kids offers maximum flexibility. You should look at local demographics such as crime rates, strength of schools and employment figures. Renters often go to locations they want to buy in as a way of testing the waters. Always look at the market before moving forward with a rental property purchase.
- 3 Bedrooms. It cannot be stressed enough just how important a third bedroom is for a rental property. This allows you to comfortably rent to a family or four, a young couple using the bedroom as an office or simply three individuals. Just as is the case when buying, there is a huge difference between two and three bedrooms. If there is not a dedicated third bedroom you should look for ways to add one or possibly convert an existing room. Whatever you pay to add the room on, you will surely get back over the course of your ownership. As is the case with buying in a poor market, buying a home with only two bedrooms can be fools’ gold. You may think you are getting a good deal, but when it comes time to find tenants you will be disappointed. There just isn’t much of a market for units with two, or less, bedrooms. Most renters either live at home for as long as possible or wait for multiple roommates to keep housing costs down. Only in special situations should you consider a rental less than three bedrooms.
- Backyard. There is give and take with every property out there. When you are looking for a dedicated rental there are some items that are more important than others. You may love a fireplace in the winter, but it may not be as necessary for a rental. One of the items that almost every renter looks for is backyard space. In a perfect world the yard would be fenced in with a clear line of demarcation between property lines. Even without a fence you should look at properties that have some backyard space. A yard with a deck or even a small patio is usually enough to suffice with renters. You don’t need an acre of land to make your rental stand out. A backyard is appealing to a family with small kids as well as a group of bachelors looking for an outdoor spot to cook out and relax with friends. A backyard should be on your list of rental property priorities.
- Appliance options. The goal of a rental should be to make prospective tenants as comfortable as possible. The more comfortable they are, the more likely they will want to stay in your rental and treat it like their own. There are a minimum set of appliances that you need to have in 2018. A property can check all the boxes but if it doesn’t have a dishwasher a renter will probably look elsewhere. The same is the case with a washer and dryer. Tenants aren’t interested in going to a laundromat and spending a day washing clothes. Even if these items aren’t currently present, it is essential to see if they can be added. Without a handful of basic appliances, tenants will surely look at other properties on the market.
- Garage/driveway. A garage or driveway can often be the item that separates your property from everything else on the market. Many tenants have had bad experiences with off street parking. Without a dedicated spot it is essentially luck of the draw and they could end up parking a block or two from the property. A garage is ideal, but even a driveway can help attract tenants. Your driveway doesn’t need to be freshly paved and sealed, any dedicated parking area will do.
With rental demand showing no signs of slowing down it is important to find properties, and amenities, renters find appealing. The right property can be a key piece to your long-term portfolio for years to come.