You’re a rental property investor. You’d like to purchase a house you can own for a very long time. Ideally, it will maintain its value and have minimal repairs and maintenance. It should also be located in an area that has strong tenant quality and gives you a healthy cap rate and cash on cash return.
Sound like a lot to ask? We know, we know, you can’t have everything, but there are certain things you can look for when trying to buy a great home for the long run. There are different factors to consider when you’re searching for a home you plan on holding for a decade or more as opposed to a house you’re looking to flip within a few months.
If you’re a long term buy and hold investor, here are a few general pointers you may want to consider as you’re searching for properties.
5 QUALITIES TO LOOK FOR IN LONG TERM BUY & HOLD PROPERTIES
1- Hidden Plumbing
You should look for a home that has rough-in plumbing and electrical wiring in a space like an unfinished basement or attic. This gives you the opportunity to easily add an extra bedroom or expand the property in the future if values in the neighborhood justify those costs.
2- Adequate Parking
Unless you’re investing in a specific neighborhood where tenants accept the reality there won’t be parking, there’s a good chance they’ll be asking about it the moment they see the property. Look for homes that have enough parking to fit two to three cars. This ensures there’s enough parking for the entire family.
3- Ample Land
Look for a house that’s located on enough land that you have room to expand in the future. The structure shouldn’t necessarily run right up to the edge of the setback that’s mandated by the city or towns zoning requirements.
Of course, there are exceptions to this rule, the primary one being urban areas. If you’re buying a rental property in an urban landscape where the underlying loss is worth a substantial amount of money, then you may not want a generous setback.
After all, vacant land is overhead. It’s a nonperforming asset. On the other hand, ample land out in the suburbs or countryside could be a selling point, as it might make tenants feel more favorable about the home. As a bonus, it also gives you the opportunity to expand in the future.
4- A Level Lot
All else being equal, it’s best to look for homes that are constructed on a level lot. Pay particular attention to whether or not the driveway is sloped or angled.
If your tenants are scraping their cars every time they pull in and out of the driveway, you’re setting yourself up for some unfavorable first impressions. If your property is located at a low point, a sloped lot could also increase the likelihood of water problems.
5- An Easily Accessible Basement Or Crawlspace
If you plan on owning the home for several decades, you’ll undoubtedly need to access the basement or crawlspace. Reinforcing the foundation or repairing some type of mechanical issue will require access. A crawlspace that literally requires you to crawl isn’t going to be fun for anyone.
Don’t pass up a great investment opportunity for the simple fact it has a small crawlspace. All else being equal, in a perfect world you’d find a great house that has a large, easily accessible crawlspace.
If you need more information about what to look for in a rental property you’re going to own in the long term, talk to a mentor, friend, investment group, or an experienced real estate agent who can help you make the right decisions.