Get your Finances in Order
It doesn’t make sense to go looking for a rental property to purchase without appropriate finance arrangements in place. Before you begin the search, get your finances in order by obtaining a copy of your credit report and cleaning up any errors that might stand in the way of securing the necessary funds. Federal law guarantees you a free copy of your credit report from the major credit reporting bureaus at least once a year. With your credit in order, you can search for a rental property, confident in your ability to secure financing when the desire to purchase arises.
Research the Neighbourhood
Just because you find a rental property you like doesn’t mean it’s a smart purchase. The value of any residential property can be affected by the neighbourhood that surrounds it. Looking into the crime rate in the area, as well as the condition of other homes adjacent to your prospective rental property, can give you insight into the long-term viability of a property. If the neighbourhood has a high crime rate, finding renters for the property could be difficult.
Find Simple Construction
As a rental property owner, you are responsible for keeping up the home to meet all applicable state and local standards for health and safety. A home with complicated or intricate construction, like a Victorian-era home, can be expensive to maintain. According to Consumerism Commentary’s website, a building with four corners is often composed of the simplest construction elements and is the least expensive to maintain. This type of structure is also the easiest to add on to if you wish to expand your rental property to include more dwelling units.
Inspect the Property
If you’ve found a rental property you’re interested in purchasing, get the property inspected by licensed home inspectors. These professionals can inspect various aspects of the property, including electrical wiring, structural integrity and the functionality of the property’s utilities. If the home passes inspection, you can move ahead confidently with the purchase. If the property doesn’t pass, you may still be able to purchase it after some repairs are made. If the home has serious structural defects, it may be a smart financial move to find another property to purchase.
This article is for general informational purposes only and must not be taken as legal, financial or any other professional advice. We recommend obtaining advice specific to your situation before making decisions relating to your investment property and financial position.