Why Purchase Rental Property Now?
Why is it smart to consider purchasing a rental property today, especially one you’ll be the landlord for?
The United States Census Bureau constantly puts out data on homeownership rates, residential vacancies, asking rent rates, estimated housing inventory, and many other details surrounding the housing industry.
When you overlay that data on top of the demographic makeup of our population, you get a clear picture of what direction our housing market is moving towards.
From its peak in 2008, the rental vacancy rate has decreased year over year. While at the same time, asking rental rates have been steadily increasing.
At the same time, home ownership has seen a large decrease as millennials, currently between the ages of 24 – 39, are looking to stay mobile and not get tied down to one particular spot.
Having children later in life coupled with an increased option of working from home are all elements that will keep the upcoming generations renting well into the future.
Can Everyone Become a Landlord?
The beauty of America is that it doesn’t take much to purchase real estate and become a landlord. In this country we don’t have to purchase the whole property upfront like in many other countries around the world.
Real estate ownership is available to everyone as long as you put your mind to it, and have the discipline to work on your goal of being a landlord.
Although purchasing a rental property will require some type of down payment, there are a number of options available that will require little to no money down. Here are a few for soon-to-be investors that are looking to get started on a tight budget:
- Finding a home that is being sold for owner finance. You can typically negotiate the down payment with the seller to be much less than a traditional 20% wanted by the mortgage company.
- In a rent-to-own scenario you can typically move into the property with very little down and be able to experience the home before you purchase it. You can evaluate the home and start looking for a renter while you live in it. Once you find a renter, you can exercise your option to purchase and not have an empty rental property sitting on the market.
- Purchase your rental property subject to keeping the sellers mortgage intact. This option is a little more sophisticated, but it can have you owning a rental property without any money out of pocket.
What Should Beginner Landlords be Aware of?
Why is it important for prospective landlords to carefully consider the kinds of properties and amenities that their future tenants will desire?
Every prospective landlord should closely evaluate the location, amenities, and property details of any property they are considering using as a rental. With millennials moving at such high rates, every 6 months to 3 years, high vacancy rates are going to be one of the largest reasons for revenue loss.
Making sure that your prospective tenants have the amenities they value available to them along with property details that fit into their lifestyle is essential in keeping your occupancy rate high.
Many landlords disregard what prospective tenants are looking for because they don’t want to invest additional money into the rental property, or are oblivious to the current market trends.
Although they can sometimes get away with it because their property might be in an ideal location, they usually have a very hard time getting the property rented.
Sometimes something as simple as adding a little curb appeal or showing how the balcony can be used as a multi purpose area for meditation or outdoor entertaining can make all the difference in keeping a tenant long term.
What Should Beginner Landlords Look Out for?
When buying a investment rental property, what features such as: # of beds, baths, designs, square footage, layout, outdoor space, etc., should you value most and make sure they are included in the property, and why?
When buying a rental property, you should look for something in an up and coming area. An area that is being revitalized. You usually see new coffee shops, restaurants, and bars come into the area.
I would stick with a minimum of three bedrooms and 2.5 bathrooms. With so many people working from home, having a separate office space is usually a plus. The extra bedroom is either used for a roommate or a spare bedroom friends can crash at.
Remember, location is key to the type of property you should purchase as a rental. If you are looking to own rentals in the suburbs, your criteria will be slightly different than if you own property in the center of town.