When your thinking of buying your first rental property or even your second, there are always certain pitfalls you should watch out for. I am not talking about contracts, etc. I am talking about the property itself.
A lot of people are so caught up in all the paperwork of buying a new property, that they forget to closely examine the current state of the property before signing an offer to purchase. This is something that you should always discuss with the real estate agent, to ensure everyone is on the same page of the sale.
Here are 5 things to consider when buying rental property for the first time.
Basic structural integrity
This is probably the most obvious point, seeing that you won’t buy something that is not aesthetically pleasing to you.
The first thing I do when I go for a viewing is, look at the walls of the property. Whenever I see a crack, I know that it is not structurally sound anymore and that I would have to pay extra in order to fix the crack or strengthen the structure.
The same goes for ceilings. You will quickly realize if there has been water leakage in the roof. You will be left with a nice big watermark on your ceiling, which will probably have to be repaired and repainted. These are all extra costs which you will have to budget for when buying the property.
This is a very important point. If your plumbing is faulty, it will cause you years of headaches and money.
The thing with plumbing is, you can’t see where the problem is because most of the times the pipes are hidden in the walls, roof or underground. What you can do is, test the taps. Nothing is stopping you from opening up each tap or flushing the toilets to see that everything is in working condition. You will quickly pick up if there is a problem with the drainage. Here are some of the signs of a faulty plumbing system:
- Leaking taps
- Water hammer
- Taps taking long after opening for water to run out
- Water not dispersing into basin
Painting a home before you sell it is definitely one of the most cost-efficient ways to increase the value of your property. No one will argue that a property that is recently painted just looks much better than a property that hasn’t been painted in years. People will actually pay more for a house with new paint, just because it looks better.
The problem is if you see new patches of paint. This could mean that the seller is trying to hide something. This is usually the case when there was a leak or two. People try to cover the damages temporarily and just patch it with paint.
It is always important to look out for this because it can end up costing you money to repair the damages.
Poor electric wiring
This goes together with the plumbing. If the wiring in your property is not correctly installed it will cause you to hire an electrician to sort out all your wiring. Most of us don’t really know much when it comes to electricity, so trying to fix it yourself could end up costing you more than it should.
In order to check if there are any major electricity issues when you are at a house viewing, don’t be shy to turn on the lights to see if they work or not. If the property comes with an oven and stove, switch them on as well.
These things tend to be looked over and then as soon as you get a tenant, the first thing they do, they send you an email, telling you that the stove is not working. This way it becomes your problem. If you tell the real estate agent about the electrical faults before signing the offer to purchase, it can be added in the contract that all electrical defects should be fixed before transfer. This way it is seller’s problem.
Overall condition of the neighborhood
When you want to lease a property, one of the most important factors is, whether or not you will be able to get a tenant. People in general like things that look good and works well. The same goes for properties. You would not want to live in a place where everything looks neglected.
This is why it is important to look for a neighborhood where you can see that the people look well after their houses.
My rule that I always use when it comes to buying a rental property is, I ask myself the question, would I live here? If the answer is yes, then the chances that I will get a tenant is very good. If the answer is no, then I might want to look elsewhere for a property.
If you can’t get a tenant in your property, you will not get rental income, which means your property is not an asset anymore, but probably a liability.
These 5 things to consider when buying rental property is my go-to-guide when I’m in the market for a new rental property. If you follow these simple steps every time your buying, you will not go wrong.
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