Finding the "Perfect" Rental Property
“How Do I Find the Perfect Rental Property to Invest In?”
My Dad owned rental properties for most of my adult life. How did he find them? He was an HVAC technician and his customers loved him. Most of his rental properties fell into his lap through relationships he made while out on job sites. He was known for his incredible work ethic, his fair prices, and his winning personality. Because he always took the time to get to know his clients, he often found out about homes being put up for sale before they ever hit the MLS. Unlike my Dad I have spent the majority of my adult life moving every 2-3 years while serving in the military and don't yet have the network my father built over a lifetime of working in the same community. So whether you are like me and are building your network in a new area or if you have lived in the same area your whole life but never focused on building a network, we can still find the right properties to add to our real estate investment portfolios!
Define Your Criteria. Do you know where you want to start buying properties? Are you interested in a certain city or a certain neighborhood? Do you want to purchase single family or multi-family properties? Or do you want to focus your portfolio on downtown apartments and townhomes or lakefront properties? Having a solid idea of the type, location, and size of properties you are interested in will be extremely helpful in narrowing in on properties that fit your criteria. This will also help you to articulate your criteria to others who are helping you in the search process!
Drive Around. Drive around and get to know every single street in the areas where you are interested in investing. You will notice the homes that look a little less updated than their neighbors. You may notice homes that appear to be empty. Often as families are deciding how to take care of aging parents and grandparents there is a time where their homes will sit empty while decisions are made. Write down addresses as you drive around and look up the owners’ information on the county tax assessor site. Direct mail and/or cold call the owners of the properties you find and ask them is they are interested in selling their property. During your drives you will also likely come across For Sale By Owner properties that are not even advertised on the MLS.
Build Your Network. It is a GREAT time to buy and sell homes in the Greenville and Easley housing market areas. Interest rates are low, and a lot of people are moving to our beautiful area. Finding a diamond in the rough to turn into a rental property can be exceedingly difficult for individuals looking to build their real estate portfolios. Spend a little time building your network with like minded people. Maybe an opportunity you find isn’t the right one for you, but it is perfect for another investor in your network. Find a real estate agent you trust to create a search for properties that fit your rental property profile. They have unlimited access to the MLS and are often GREAT networkers who find out about properties before they are even posted on the MLS. You can also search your area for Wholesalers. Wholesalers are known for finding gems that never hit the market and with a little hard work you can turn these properties into lucrative rental investments.
Check the Numbers. Before you fall in love with a particular property, conduct a rental property analysis. Racine Properties, LLC provides Rental Property Analysis as a free service to our clients. We will compare you investment (both the loan and any renovations), the after repair value, the rental income, the monthly expenses and provide a detailed report of the Return on Investment and/or the Cash on Cash Return on Investment (CoCROI). Please please please run the numbers before you spontaneously purchase what you THINK is the perfect rental property.
Whether you are lucky to invest in a neighborhood where you have already built a great network or whether you have to work hard to find properties that will earn you the highest CoCROI, with a little time and hard work I am sure you will find the perfect rental property for your first real estate investment or to add to your existing portfolio. Next week we will explore ways to fund your current or future rental property investments!