What Principles Should You Follow During Property Screening?
We already talked about the several factors to bear in mind when you select a residential rental property, such as location and physical condition of the property. However, the main factor in this process is you, the prospective property owner and landlord. Your decision to buy a particular property will largely depend on your own skills, interests, and comfort level.
In order to help you reach the best decision possible, here are some key principles to keep in mind:
Find an arrangement fit for you: You should take your available time and skills into consideration when making the decision. For example, if you are a busy urban professional, you may want to find and rent out a few condos near your primary residence. This way, all you need to do is deal with interior maintenance and tenant issues. On the other hand, if you are a semi-retired seasonal worker, you might be able to manage a single-family home. Another important consideration is your skill set, resources, and background. Think about it this way: you will probably not want to buy an old and broken duplex that needs a lot of fixing if you’ve never hammered a nail or used a lawn mower. This type of aged property may be the ideal choice for people who have built their own house from scratch.
Stick to what you know and specialize in: If you have already bought a specific type of property and have experience successfully renting it out, it’s not a bad idea to stick to that type of property and method of operation. Once you’ve already invested in real estate, you understand the market, the type of tenants drawn to that type of property, and the time and skills required for the operation. Don’t let this knowledge go to waste. Most likely, you can repeat the process and succeed.
Find a type of property that fits your situation and works in your market. Also, consider focusing on one geographic area.
Focus on properties that are currently undervalued but will definitely appreciate: You should know the market inside and out and be able to spot a good deal when you see it. Keep an eye on real estate listings and rental rates in your area so that you know the average pricing and when a specific property deserves your attention.
Keep a close eye on the market: It is essential to make sure that the type of unit you choose is in a good position to attract a wide range of potential renters in your area.
Do not take on more maintenance and repair burden than you can handle: You need to understand how much you are taking on in connection with the repair and maintenance of the property. A professional inspection report can usually help you get a general idea and help you decide whether to buy the property or leave it. Depending on your available time and skills, you should pass on any properties that require too much work for you to handle.
Landlords should be fully involved in the selection of rental properties. Remember to play to your strengths, pick what you specialize in, know the condition of the market, find a property that would produce positive cash flow, and only take on maintenance and repairs within a reasonable range.