5 Things To Know When Buying A Rental Property

By
Real Estate Agent with Amanda Davidson Real Estate Group Brokered By eXp Realty 0225221517

5 Things To Know When Buying A Rental Property

If you’re a homeowner who also wants to become a landlord there’s a lot to consider. Surprises when buying a rental property are never welcome and can often be avoided. Before you become an investor check out 5 things you need to know when buying a rental property.

 

The rental market in Northern Virginia is extremely strong and prices have been rising for over 10 years. Demand for rentals is high and millennials make up a large amount of the demand. They are often opting to rent well into their 20’s due to the high real estate prices in this area combined with student debt and older child-rearing years.

 

High demand in a desirable market like Northern Virginia creates an excellent opportunity to purchase an investment property.

 

Here’s what you should know when buying a rental property.

5 Things To Know When Buying A Rental Property


Location

Let’s say it again … location, location, location. It really is THAT important. Selecting a market with low vacancy rates and high demand should be at the top of your list when buying a rental property. It’s the simple law of supply and demand. The higher the demand and the lower supply the better. A highly sought after location will be a costly investment but, it will also mean a higher return both in the form of monthly rent and in property appreciation. As the value of your property rises you’ll be passively making money on top of the rent you’re collecting.

 

Location Part II – Walkability

When buying a rental property location isn’t just the big picture of what city to buy in. It’s also what neighborhood to buy in. Proximity to shopping, dining, entertainment, and the ever sought after public transportation should all play a role in your decision-making process. Walkability is directly attributed to a higher home value. Walkability is also a key factor to millennials looking for their next home.

 

Property Taxes

Where you buy your rental property will determine what the property taxes are. This all goes back to location too. Property taxes can vary drastically by location and this is another important factor to consider when buying a rental property.

 

For example, in Fairfax County homeowners pay $1.15 per $100 of assessed value where in Arlington County homeowners pay $1.013 per $100 of assessed value.

 

When buying a rental property you’ll want to ensure the monthly rent is high enough to factor in what you’ll owe on property taxes.

 

You need to ensure your rental property is in a location that provides a high enough monthly rent to make up for what you’ll pay in property taxes.

5 Things To Know When Buying A Rental Property


Maintenance Expenses

When you own a rental property you still have the responsibility of maintaining the property as if you were living there. Ongoing maintenance is inevitable and it could be as small as a leaky faucet to as large as replacing the HVAC. When buying a rental property pay close attention during the home inspection. This is a prime opportunity to learn about the property and understand if there are large items that are nearing the end of their useful life that will require budgeting for a replacement in the near future.

 

Depending on what type of rental property you buy your maintenance costs will vary. For example, if you purchase a single family home you will be responsible for the roof and siding. If you purchase a condo it’s not likely you will have that responsibility but, you will have a condo fee to pay each month. There are pros and cons to both.

 

Ownership of a rental property is a long-term investment and budgeting is going to be required each month regardless of what type of property you buy. Doing so will prepare you for expenses throughout the time you own the property.

 

Property Management

Will you need property management when you buy your rental property? Depending on where you’re located and where your rental property is located this might be something to consider. Your schedule and daily demands should also factor into this decision. If you live in a different state than where your rental property is located it may even be a requirement to have property management. Property management is another expense to consider when factoring your return on investment.

 

Are you ready to buy a rental property?

These certainly aren’t the only things to know when buying a rental property but, all of them should be at the top of the list of things to consider. Buying a rental property can be a very wise investment but, as with any other investment you have to do it correctly. Not every property is the right rental property investment. Enlisting the expertise of a trusted real estate agent who has experience working with investors is always wise. Do your homework and make sure you’re selecting the right property, doing so will set you up to earn a passive income for years to come.

 

Additional Resources

Converting Your Home To A Rental Property via Luke Skar of Madison Mortgage

How To Pick A Neighborhood You'll Love

 

 

Posted by

 

Amanda Davidson Real Estate Group

 exp realty

 

 

      

 

AMANDA DAVIDSON  
l ASSOCIATE BROKER l  
l AMANDA DAVIDSON REAL ESTATE GROUP BROKERED BY eXp REALTY l

C  703.431.3755   |   O  866.825.7169 ext: 743  |   W  www.amandadavidson.com

A  1320 Central Park Blvd Suite 200, Fredericksburg, VA 22401




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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Sally K. & David L. Hanson 06/05/2019 02:20 AM
  2. June Piper-Brandon 06/10/2019 12:53 PM
Topic:
Home Buying
Location:
Virginia Fairfax County Alexandria
Tags:
rental property
investment property
investors
investing
passive income

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Show All Comments
Rainmaker
717,075
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

Excellent post! Very well written and thought out. I do believe in rentals as a way to invest in your future. You have explained many of the most important aspects of where to start. 

Jun 09, 2019 09:34 PM #44
Rainmaker
438,582
Warren Schutt
Warren Schutt Real Estate - Danbury, CT
Helping People with Their Moves for over 40 Years

All good points. I would add one more - "suitability."

Do you have patience, flexibility and stomach to deal with the surprises that can pop up when that (hopefully) rare bad tenant stops paying rent, destroys your property or just is a general nuisance.

Owning property and being a landlord can be a very lucrative investment. I know because I am. But, if it were so very easy - everyone would be a landlord.

Jun 10, 2019 04:45 AM #45
Rainmaker
510,163
Matthew Klinowski, PA
Downing-Frye - Naples, FL
Golf Community Real Estate Specialist

Hi Amanda, great tips for home buyers to consider before buying a rental property. It can be costly if you don't do your due diligence ahead of time. Have a great week!

Jun 10, 2019 05:00 AM #46
Rainmaker
1,099,360
June Piper-Brandon
Houwzer Inc - Baltimore, MD
Piecing Dreams One Home at a Time

This is a great starter list for would be investors.  

Jun 10, 2019 12:51 PM #47
Rainer
362,376
AndreaBFerreira CRS - SRS - CLHMS
Keyes Co. - Davie, FL
Miami Dade, Broward and Palm Beach County in FL

All very good point to keep in mind. Been around point of interest, like colleges, hospitals etcis also a way to reduce the vacancy. Thank you for sharing.

Jun 11, 2019 03:15 AM #48
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Ricardo Mello you did a great job on your post. Thanks for stopping by. 

Jun 11, 2019 04:44 AM #49
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Anita Clark thank you!

Jun 11, 2019 04:44 AM #50
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Jeff Dowler, CRS I agree, a lot of times the numbers just don't make sense but, until they're run in detail one wouldn't know. Thank you for your comment.

Jun 11, 2019 04:45 AM #51
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Joe Pryor I don't disagree with you in the slightest. In Northern VA it's a must but, every area is of course different. 

Jun 11, 2019 04:46 AM #52
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Andrew Mooers | 207.532.6573 you perfectly illustrate why working with an agent who knows the intricacies of the local market is a must. 

Jun 11, 2019 04:51 AM #53
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Cindy Edwards that's one that definitely varies by area, in Northern VA it's a must but, I understand in other areas it's not. Thanks for stopping by!

Jun 11, 2019 04:51 AM #54
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Debra Leisek I think it is too, it's not easy but, it is a solid way to build long term wealth. Thank you for your comment!

Jun 11, 2019 04:52 AM #55
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Warren Schutt you're right, there is nothing easy about it! Worth it but, not easy. 

Jun 11, 2019 04:53 AM #56
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Matthew Klinowski, PA it sure can! You said it best - due diligence. 

Jun 11, 2019 04:53 AM #57
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

June Piper-Brandon thank you. 

Jun 11, 2019 04:54 AM #58
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Andrea.B Ferreira 954-303-8289 CRS great point to add, thank you!

Jun 11, 2019 04:54 AM #59
Rainmaker
2,299,914
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Amanda S. Davidson - These are all excellent tips and this blog post is a keeper for prospective tenants. You are one of the wisest brokers in the North East. It would be an honor and a privilege to meet you one day or do business together.

Today, tomorrow, and always I wish you the sky and moon!

Jul 07, 2019 07:08 PM #61
Rainer
558,066
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Amanda,

Working with a Realtor, who handles rentals can be very helpful. Sometimes neighborhoods next to each other have quite different rental profiles. Good to research the details before spending your hard-earned money. Getting a 6% return or an 11% return can make a huge difference over the next 20 years or more that you might own the place.

Jul 07, 2019 07:51 PM #62
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Patricia Feager, MBA, CRS, GRI,MRP thank you so very much. I hope it helps at least one person who is diving into investing in real estate. I truly appreciate your compliment, it means the world to me. It would be an honor and privilege to meet YOU. You're such a class act and one of the most genuine people I know. We'd have the smoothest transaction if we joined forces!

Jul 08, 2019 05:04 AM #63
Rainmaker
1,545,148
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Dorte, your comment is perfectly stated. Such a huge difference and well worth the time it takes to connect with an agent who knows the intricacies of different neighborhoods. Thank you for adding to this post!

Jul 08, 2019 05:10 AM #64
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