Tips for Buying a Great Rental Property

Finding a rental property in Bend OregonFinding a great rental property to buy isn’t molecular biology but it shouldn’t be taken lightly either.  There are a lot of factors that can come together to create a snowball effect that determines whether or not you make money on your investment.  Here are a few tips to keep that snowball from running you over and emptying your wallet.

There is a saying in real estate circles that goes:  “You don’t make money when you sell a home, you make money when you buy it.”  Since it is unlikely that you will find yourself owning a rental property without first buying it, this is a great mantra to adopt.

Buy below market value.  This sounds easy but it usually isn’t.  The days of having bunches of bank owned homes to choose from are gone and that means buyers need to be patient, well connected and probably willing to get their hands dirty.  Patience is a virtue that will come in handy not only while you wait for a good deal to hit the market but also when you have trouble making a deal come together.  Not every seller is going to be interested in taking a price below market value so some deals are just not going to come together.  This also underscores the importance of having a Realtor® on your team who is skilled at negotiations.

Buy in a desirable location.  While you are being patient use that time to check out neighborhoods that you might have overlooked.  Look for a rental property in a location that offers advantages over other locations such as being close to grocery stores and restaurants, a fantastic school district, a short distance from a park or has easy access to public transportation.

Purposefully buying a rental property in a desirable location doesn’t just improve the odds that it will rent quickly.  It also improves the odds that it will stay rented.  Appreciation will be much more likely while you own it AND a house in a great location will be easier to sell.

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Buy a well built house.  Some times saving a few thousand dollars on the purchase price isn’t worth the pain and suffering that could come later with a poorly built house.  Find out who built the house you want to make an offer on.  If the seller doesn’t know, you should be able to find it in county records on a site like Deschutes County DIAL.  Do you already have an opinion about the builder?  If not, your real estate agent probably does or at least knows someone who does.  If the builder passes the sniff test then put the house through the wringer and get a professional home inspection.  Don’t be cheap here, because there is too much money at stake to not know up front what issues the house might have.

There is no such thing as a “sure thing” in real estate but if you follow these tips then you can say:  1) you bought at a discount which means you made money on the house the day it became yours.  2) You bought in a desirable location which makes it more likely the value of the property will go up between the time you bought it and the time you sell it.  And 3)  You bought a home that was well built so you didn’t have to spend every penny in cash flow on repairs.

About Dan Seim

Dan Seim is the primary contributor to Preferred Residential's blog. He has been writing about real estate issues that affect home owners in Bend and Central Oregon since 2011.

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