5 Things To Know When Buying A Rental Property

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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  703.988.3151  |   W  www.amandadavidson.com

A  20130 Lakeview Center Plaza #400 Ashburn, Va 20147




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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:
investing
investors
investment property
rental property
passive income

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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Amanda:

This is all excellent advice and key items ANY would-be investor should consider. The financials, which impact in a number of ways - purchase, maintenance, rent, expenses -are especially important to bear in mind. One should also investigate the tax consequences as part of the due diligence.

Congrats on a well-deserved feature.

Jeff

Jun 09, 2019 11:26 AM #40
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Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

I can agree with everything here but the direct correlatioin between walkability and the value of a home. For instance a home outside the city with 5 acres suitable for horses in our area rents well and values well. Also in cities that are spread out and car oriented whilke having great road systems also negate that issue. In some areas u=yes, but it is not universal in my opinion.

Jun 09, 2019 01:41 PM #41
Rainmaker
1,936,443
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Walk-ability is not a big consideration in our multi unit rental property market. The condition of the roof, heating system, the neighboring property conditions and is the entire area all renters, no home owners, etc. How long the tenants have been on board, how they take care of the premises and are the rents in line with the market... all of these considerations means hire a local real estate professional that is savvy and has lots of listings, sales of MULTI UNIT RENTALS... That's what it takes Amanda S. Davidson !

Jun 09, 2019 02:12 PM #42
Rainmaker
794,016
Cindy Edwards
RE/MAX Checkmate - Johnson City, TN
CRS, GRI, PMN - Northeast Tennessee - 423-677-6677

All good tips Amanda.  I would agree with Andy above me.  Walkability not a huge factor here in my area of Tennessee.

Jun 09, 2019 03:03 PM #43
Rainmaker
615,192
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
378,282
Warren Schutt
Warren Schutt Real Estate - Danbury, CT
Helping People with Their Moves for over 36 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
381,963
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
995,505
June Piper-Brandon
Long & Foster Hampden - 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
293,278
Andrea.B Ferreira 954-303-8289 CRS
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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, VA
Alexandria Virginia Homes For Sale

Anita Clark thank you!

Jun 11, 2019 04:44 AM #50
Rainmaker
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, VA
Alexandria Virginia Homes For Sale

June Piper-Brandon thank you. 

Jun 11, 2019 04:54 AM #58
Rainmaker
1,516,235
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Ashburn, 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
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