05 Dec A Guest Story: 10 Steps for Checking Out a Rental Property
It’s a great honor to have Jeff Summers, a successful Managing Partner from Aestas Real Estate Holdings, LLC sharing about his experience in a two part blog series! There is great information here! Thanks for sharing, Jeff. He says…
A little history before we begin to blog:
I have been in the automobile dealership business for 30 years, and the last 15 years, I spent doing demographic profiling of our customer base. That is where I built a profile of what our customer looks like on paper, for example, income, age, marital status, children, credit worthiness, debt to income ratio’s, etc. (There are over 50 data variables available to use, so it can be consuming.)
I would take that data, and run it against available databases and find people who fit the criteria – who were not driving our product, and target market these individuals. As you can imagine, the penetration rates were higher than 90% of other methods used today, so our success rate began setting an industry standard, which gained a lot of attention from the manufacturers. One of the advantages allowed me to know the particular zip codes around my immediate area. This was based on several variables, which gives me the advantage of knowing the area quite well, especially when it now comes to the way I search for houses in my market.
But don’t give up just because you don’t know the area. Get in your car, and drive the zip codes that you want to do business in, and map it out in a spreadsheet or on a pad of paper – but get the information etched in your brain so when you get ready to hunt for property, you know the area you want, and you will save a lot of time wasted by driving to every house you see come up on the MLS or realtor.com. (That is worth the price of the ticket – as Billy would say!!)
One of the first steps is to get in with a real estate agent, and get them to hook you up on the MLS, so you can get every listing as it hits the web. (I had my agent select the zip codes I wanted, the type of house I wanted – 3/2/2 or whatever you desire, and the top price I wanted to pay. This will save you going through hundreds of leads that are not in your profile criteria.)
I have six zip codes I want to focus in, and they are all within 20 minutes of my house by car. This is extremely important to me, as I manage and do repairs on the properties myself – at the moment.
I am now going to show you what screen shot I get when a home hits the MLS. There are several things I look for – immediately, to see if I want to pursue any further with the property. Take a look at the listing and I will explain what I look for – you may use a different variable or method – nothing is wrong with a different approach, as long as it works and fits within your model!
Once you get hooked up to the MLS, you will get listings like this:
Don’t let all the information overwhelm you. Here’s my method of checking out the property. (Yours may vary and that’s OK, as long as it fits the model you set for yourself to use!!)
10 Steps for Checking Out a Rental Property
1. The very first item I look at is HOA – Home Owner’s Association. I will not buy a property that I cannot totally control. If the property is part of a HOA, I will not even look any further. It is a dead deal to me. (You may find it works for you, but this is one I will not even consider.)
2. In the top right corner, the square footage price is listed – Lst $ / SqFt: $68.51. This generally means (in my area) that the house needs work, or there’s a desperate seller. The going rate for retail is $100 per square foot. For me, if the price is at or above a hundred dollars per square foot, that tells me the owner is more proud of this property than I am, and I move on to the next one. But this listing has my attention at this price! I have purchased some at $85-90 per square foot, but they are almost move-in ready.
3. I select the link with the address and look at the street it is on. I also zoom in and see if the neighbors have junk cars, or trashed out properties next door. If it looks pretty good, then I proceed.
4. I read the property description and interpret what the realtor has listed. What caught my eye on this property is the possibility for 4 bedrooms – these rent higher in my area, and I have a waiting list of people who need them. This may not be the case in your area, but for me, I hunt for 4-5 bedroom homes, or homes that can easily be remodeled a little to create the extra room. Large families have a hard time finding affordable housing when it comes to renting!
*Watch – sometimes the text says “as is” and seller is not paying anything for repairs. This is when you need to have a good inspector and foundation expert in to verify before sinking any money into the property. (This is experience speaking. When in doubt, check it out!)
5. Look at the year built. If it’s prior to 1960 – be careful with lead paints and asbestos siding, etc. If it’s built in the 70’s watch for pink tile in the bathrooms, and paneling throughout the house. Sometimes you can get by with off color interiors, but nowadays, there are companies that can “coat” pink and make it look good at a reasonable price. That’s another item worth the price of the ticket…
6. Next, check the taxes on the property. On this one, it is $1,331 per year, which is reasonable for the area.
7. Look at the school district. If you have a great school district, you can use it to advertise when you list the house for rental. If the house is in a “bad” school district, you may not want a 4-5 bedroom home, as those are generally needed for children.
8. Check the details – see if it has gas or electric. See what appliances come with the home, so you’re not shocked after you purchase it!
9. When all of this checks out to your level of selection, then drive by and look at it and the neighbors. If it looks appealing to you, It will look appealing to a future tenant. If it looks unsafe or trashy, you will have issues getting top dollar for your rental.
10. If after you drive by and look at it, and everything fits your perimeters, then call your agent and go inside and look it over to see if it is what you expect.
Jeff will be sharing part #2 of his story with this particular rental property next week, plus some more great information about getting started & succeeding in real estate! Don’t miss it!
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