If you are considering investing in real estate for the long term, such as with renting, then here are a few things to consider when looking for the perfect property to rent out.
You have probably heard this a million times before on DIY shows, and from real estate agents. While location is important. You have to ask yourself a few serious questions before you enter down this path of real estate investing and renting:
1. What type of house are you planning on investing in? Do you want to rent it to a family? or a working couple with no kids? Or are you wanting to rent out rural property?
2. Once you have decided which type of home you are interesting in renting out or investing in. Now, look in the paper and online and get a feeling for the rents being charged in your area for that type of property. If there is a shortage of rental properties in a family neighborhood area, then you should consider investing there. I asked our real estate agent if he ever got asked about houses for rent, and he said families seemed to always be looking to rent homes close to public schools.
3. Get a feeling for the area you are considering. If you are in a family neighborhood looking at houses, where is the local public school? parks? arenas? etc...
You want to match the tenant with the house, and you are more likely to get a longer term tenant. There is no point in fixing up a nice bungalow in town amongst families with lots of kids running around if you are trying to attract a working couple with no kids.
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We have just finished renovating a semi detached house as a real estate investment. We have decided to rent this house out, and therefore we created a family friendly interior. With a nice kitchen and tough floors and carpets. We used good crayon resistant paints for the walls, and kept simple lines throughout. We put a door back on the basement stairs (it was missing when we took over the place) for a safer environment. As our goal was to attract a family. I even asked a family friend with small children to give me some ideas as our kids were grown, and asked if he would live in it? He said Yes.
We picked a house that was walking distance to a public school, and after we had done all the kid family renovations, we advertised it as a family home, and we had many interested families right away.
The idea here, is to renovate or decorate your investment house for its purpose, not the way you would like to live in it, but for the purpose of renting to your particular type of tenants.
The same rule would apply to a city condo or city townhouse that caters to upward and mobile young people. You are not going to create a "kid friendly" environment, you are going to go for a hip and trendy style to attract the right tenants and get the rent on the higher end of the rent scale for your area.
The family that will be renting our house, had been looking around the neighborhood, and were very excited by the safe house we had created, and with all the new floor coverings that can take a beating, and simple painted walls that can take some coloring, and doors that worked (you would be surprised what is offered out there) and we refinished the hardwood floors to a shine with very tough varnish, and we used a tough vinyl laminate style flooring for the kitchen that is waterproof and can take a beating.
This family was very excited by the upgrades, and are willing to pay the higher end of the rent scale for that area, just because the house is family ready, and the school is around the corner. She told me, that many of the houses she had been looking at were not safe for her young children. One had a backyard pool, and others had broken door latches, and exposed wiring etc... and bad equipment such as old furnaces and water heaters and next to no insulation. and yet still wanted fairly high rent.
We had replaced the old furnace with a high efficiency one, new water heater and we had extra insulation blown in the attic. At the end of the day, this is still our investment, and we plan on keeping it for a long time, therefore we could justify these initial expenses. They gave the house more value, and attracted good tenants, who were willing to pay the higher rent.
Real estate investing, whether to renovate and sell (flipping) or for the long haul, such as with renting, you need to keep your personal style out of it, and treat this as a business. You need to go for neutral tones, safety, and the renovation or decorating should match the house and its neighborhood.
This way you are going to make money.