When it comes to buying rentals, certain types of properties are more suited to set you up with success. There are certain features that I look for when making a decision to purchase. These features aren’t requirements by any means, but just a preference when sorting through potential properties.
We’ll start with bedrooms. On a single family home I try to get at least 3 bedrooms. 1 or 2 bedroom homes will tend to get you a more transient tenant and are tougher to resell down the road. I don’t mind 4 bedrooms but once you get too many bedrooms you will tend to get large families or roommate situations that will more than likely cause a lot of wear and tear on the property. For apartments, I go for at least 2 bedroom units. 1 bedroom units tend to have more turnover and a lower quality tenant for the most part. Most people nowadays want a home office or another room to store all of their junk.
Next is the age of the home. Here in Pittsburgh, we have a lot of older homes. Typically, the older the home is the more money you will have to put in to maintain it. This is not to say that I won’t buy an older home, but a home built in the 50-60’s will likely cost less in repairs than a home built in the early 1900’s. The older homes also tend to not be very insulated, causing the utility bills to be higher. This might increase turnover if tenants are fed up with having super high heating bills in the winter time. So ideally, the newer the property the better, but you can usually get some great deals on older properties that make up for it. Not to mention, a lot of the areas that have older housing stock have been revitalizing recently in the Pittsburgh area making for some great appreciation gains.
Ideally I look for some type of off street parking in a property. Best case scenario is a garage, especially for single family homes. Most people looking for a single family home want a garage here, especially in the winter time. Properties with garages will rent much quicker than those that don’t have them. Garages aren’t as prevalent for apartments, but you definitely want to have some off street parking if possible to set yourself apart from other apartments and retain tenants.
When searching for apartment buildings you want to have as many of the utilities as possible to be paid for by the tenants. If a property has separate gas, electric, and water meters, it is much more desirable for a landlord than one that only has one meter for a certain utility. If it only has one meter, then you will be responsible for paying that utility for the whole building. If tenants don’t have to pay for it, then they will have no incentive to be conservative with their usage. One gas meter here in the Pittsburgh winters is definitely not ideal. Tenants will be blasting the heat and keeping windows open in the middle of the winter. Typically, electric is always separated. It is pretty common to only have one water meter on a lot of the older apartment buildings so when you can find one that has separate water meters that is ideal. This will prevent leaks or running toilets from going unaddressed if tenants know they are responsible for it. When it comes to single family homes the tenants will usually always be paying for all of the utilities.
For rentals I typically don’t want to buy a property with a huge yard. Most tenants are not going to want to take care of maintaining a huge yard space. It is ideal to find a property with a yard because people with pets and children value the outdoor space, but you want to keep it manageable. Not only for tenant retention but it will make it easier to rent as well.
When it comes to location I always want a place that I would live myself. If I wouldn’t live there myself, then what kind of tenant am I going to end up attracting? Probably someone that is going to cause all kinds of headaches. Take a look around at the neighbors’ homes as well, because potential tenants are going to do the same thing when they come to view the place. I also want a property that is in a central location and has easy access to highways and amenities. These are all things that potential tenants look for and will keep them around. School districts also play a big role in attracting and keeping great tenants that have children.
These are all just ideal qualities I look for when shopping for potential deals. Now you don’t have to hit every one of these to get a good deal, but typically the more boxes you can check the higher quality the property and tenant pool is going to be.