You will have to sort through a variety of factors to determine which properties make the best rentals.
In a nutshell, you want to look for a property that LOOKS like it has a lot of problems, but in reality, the problems are quick and easy to fix. Properties like this have low competition and can be purchased for a bargain.
Let’s dive into the different factors you need to look at.
3–4 Bedrooms are best because a 1–2 bedroom attracts a temporary crown of either singles or couples… and even couples will eventually start having kids and need to scale to a bigger property.
Age is synonymous with the condition, because the older it is, the higher the chance the worse condition it is going to be, and the less recent the capital expenditures will be
Older homes are less energy efficient, which means that the utility bill will be higher, which will drive away long-term tenants
The garage is a good feature to look for if you are buying a single-family because a garage goes a long way for long-term tenants
Search for homes where the utility costs are for the tenants because this will dramatically increase your monthly cash flow.
A smaller yard is better because tenants will not take care of their lawns as diligently as a homeowner will. But recreational space does matter; families like to have space for their kids to play and run around and be kids
Off-street parking is less than optimal. A Driveway, garage, and carport are very much preferred by all great tenants
- It’s intuitive; tenants want a place where they can have a life and do the regular activities most people do
- Like go for a walk in the person, eat out at nice restaurants, have a gym and grocery store within walking distance, etc
That being said, you don’t want to necessarily look for the perfect property. Rather you want to pick the property with the perfect problem. What does this mean?
- The most important thing here is understanding the exact budget it takes to fix that problem to analyze the deal’s numbers properly