How to Avoid Buying a Rental Property That Is Hard to Manage

What makes a property easy to manage?

Steps

  1. Multiple story properties damage lower units when a big water leak occurs. Coordination of repairs in multiple units is a headache that can be avoided by buying single story properties. Multiple story properties also need exterior stairs replaced when weathering and wear and tear occur.
  2. Flat roofs only last 1/3 the time of inclined roofs. Flat roofs are walked on by cable company installers and children that go up to get their toys. This damages the roof and it will not last as long as an inclined roof. Water collects on a flat roof and leaks are more common.
  3. Avoid major streets and allies. Noise on major streets cause tenants to move more and people tend to sell drugs in allies. The noise and drug problems cause more turnover. If you buy a property on a major street, in the next few years, a bar or liquor store might open up on the same block and this attracts people on drugs that cause more turnover.
  4. Large units have higher utility bills and more maintenance. Avoid buying properties where you pay the tenants electricity and gas. If you run an ad a little bit more and advertise that utilities are included, you now have a unit that is priced higher than the going rent and it makes vacancies longer to rent.
  5. Small units like singles, studios and bachelor units have more turnover, especially during recessions. Many banks will not loan on smaller units because they are hard to rent in recessions. Banks prefer to rent on larger units or units that have a variety of sized units. When I have had a tenant want to move because they want a larger unit, I talk them into waiting until a larger unit becomes available, this way I can keep good tenants. When a tenant that lost a roommate wants a smaller unit, I can talk them into staying if I have a unit available or becoming available.
  6. Avoid properties on hills and with basements. Properties on hills have more slippage of dirt and foundation slippage is more common with water problems. A big water leak will fill up a basement with water and will also cause a foundation to slip.
  7. Buy properties with a view or in in nice residential area. When you have a desirable location, many times the friends of tenants will ask the property manager when another unit will become available. If the rent is low, I have had tenants take the unit the day it became available and paint it themselves. This way I have no loss of rent. This is a big plus if you have a low rent but the area must be very desirable.

Tips

  • Always get an application filled and a rental agreement signed before you give the tenant the keys. This way the tenant knows that you can damage their credit in an eviction and they will not get behind on the rent.
  • Cleaning, Plants, Paint and Replacing broken fixtures are the cheapest way to make a property look better.
  • If rents are comparable, the unit is clean and fixed, it will rent quickly.

Warnings

  • Avoid buying properties that are 100% vacant because the city likes to cite new owners of these properties.
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This entry was posted on Wednesday, December 28th, 2011 at 1:02 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.