Purchasing a home as an investment property can be a great way to increase your assets and have an additional income stream. Since this is normally considered a long-term investment, there are several things you’ll want to watch out for when shopping for that home to use as an investment property.
Here are five issues to watch out for when looking for a rental property:
When it comes to buying an investment property in a bad neighborhood, the opinions are mixed. Some people will say you will get a better return on your investment, which is why you’re considering the property in the first place. Others will tell you that you shouldn’t buy an investment property in an area you wouldn’t live yourself.
If you are uneasy about the neighborhood where an investment property is located, ask around. Be sure to talk to people with no ties to the property. They will likely give you an honest answer about the neighborhood. If you’re looking at a property and see some neighbors outside, stop and ask them how they like the neighborhood and how they like living there. Remember if people feel their potential neighbors are shady, they will be less likely to rent your investment property. If you’re still worried about crime, you can check crime rates as well. Some good resources are SpotCrime, and NeighborhoodScout. The numbers will help paint a good picture of the surroundings.
Structural issues like mold and water damage can lead to major health problems and potential lawsuits. Mold can be a result of inadequate insulations problems as well as moisture issues. Whatever the case, you don’t want to invest in a home with mold issues. Getting rid of it can run you in the thousands.Water damage is another biggie on the list. Peeling paint, bubbling wallpaper and damp smells are all indications of water damage. Also check around sinks to look for any cracks in the plumbing. While anything can break down once you buy a home, you don’t want to invest in one that you’re going to have to pour a lot of money in to fix from the start.
Just like structural issues, problems with the foundation are also indications of some serious issues. Cracked foundation walls, buckling walls and or any gaps on the outside are signs of damage. On the inside look out for cracks in the drywall or ceiling or around windows and doors. These are all signs that the frame of the house may be shifting. While some shifting may be normal, cracks can indicate more serious problems. You may want to move past an investment property like this and look for one without these issues.
While you may think a shared driveway would attract renters because it could potentially give them a place to park, think again. Sometimes shared driveways are more trouble than they’re worth. If you’re eyeing an investment property with a shared driveway, speak to the owners of the other home. Ask about the rules and how they use it. If there are no rules, you’ll have to think twice about how to handle this issue. No rules means free reign. From parking issues to people leaving things in the driveway, there are all types of problems that can occur.
Good renters are key for investment property success, so make sure you avoid the glaring issues we’ve discussed when shopping for an investment property.