INVESTING 101 OVERVIEW

We receive calls almost every day from people wanting to invest in rental properties. Their questions are always the same. What type of property is best for a rental, and what area of the city should they be looking in? The answer is obvious, yet somehow difficult to do and or understand.... Invest in a property where the numbers are right and you're going to meet your objective(s)!!

You Make Your Money When You Buy!:
Ok, so what does that really mean? Well there are two well know axioms in real estate. They are ... Location, Location, Location and You Make Your Money When You Buy! Lets take the second one first, "you make your money when you buy." You see, as long as the property can be used for its intended purpose, and isn't worthless, then as long as you buy it for a low enough price to where you will be able to make money off it, you've probably got a good deal. What type of property might be worthless or almost worthless. How about a condemned property that was used as a toxic dump site. Or maybe a property that gets flooded frequently and at times is "underwater". A rental property that could be almost worthless would be one that butts up against an extremely loud and smelly manufacturing facility... you get the idea.

What is the Best Location?:
So that leads us back to location. Again, from a rental standpoint you want a property that will be 'liked" by as many people as possible. You also want a property that is going to be "seen" by as many people as possible. Why? Because the more people that see it, or know that it is available, the faster you will likely get it rented. At the same time, most people usually do not want to live on a busy street, especially if they have children. So where is there a lot of traffic that is not on a commercially busy street. There is only one place that fits that criteria in almost every community.... near a school. Schools are traffic magnets for short periods of time each day and yet many are not on commercially busy streets, they are buried in the middle of neighborhoods. That doesn't mean that properties that are not located near a school will not rent. However, given a choice, the property near the school will normally rent faster because it will get more exposure.

What Amenities to look for:
Another thing to keep in mind when selecting a property, strictly for rent, is not to impose your own personal likes and dislikes into the decision process. Try to be objective from a renters point of view. You may like two story homes, you think they look cool and usually on a per square foot basis they are cheaper. From a tenants standpoint they may not be as great. For one thing older tenants will not climb stairs. Many parents with infants would like to stay away from stairs as well. There are many medical disorders that may prevent someone from climbing stairs frequently no matter what a persons age is. Consequently buying a two story home may put constraints on who will rent from you. Age restricted communities pose a similar problem. When you buy in an age restricted community, you are really limiting who can rent from you. Here is a pretty safe bet. Most tenants would enjoy covered parking especially in a city where the temperature can reach 120 degrees in the summer. So either a car port or a garage is a good thing to have. We haven't had any tenants NOT take a property because it had a garage or carport, but we have had many not take a property because it didn't.

Imposing your Likes and Dislikes into the decision process:
Let's go back a second about imposing your likes and dislikes. Frequently an owner will tell me how great their property is because it is one of just a few in the entire complex that sits right next to the pool. Unfortunately, there are just as many people, maybe more, that would not want to be next to the pool with all the noise, loitering, and people that can see in at you just as easily as you can see them. Or how about the owner who thinks his unit is better because it's on the second floor... you don't get the noise of someone walking on your ceiling like you do on the bottom unit. We already went over the problem of stairs, how about roof leaks. Downstairs units are rarely affected by roof leaks, or roosting birds and their constant noise making. For the most part, there isn't anything that you think that is great that someone else could not have a problem with. The trick is to find a property that has as few objectionable things associated with it as possible.

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