This is number one on the list because it is important to the success of your property and overall investment. Not property itself, but property location and neighborhood characteristics are going to play a major role on choosing the right property management company.
Management companies make good properties perform great by being laser focused on specific parts of a market. This applies to Turnkey companies as well. The best companies will tailor their services to the properties that fit within their expertise and seldom attempt satisfy the entire market. Those that do, can spread themselves thin.
Search for a great property manager that services to the type and style of investment/property you are acquiring.
Location, location, location is a huge factor in anything related to real estate. For your investment properties the location is the neighborhood. Not the state, city or market; the neighborhood. Obviously, the state and city play a role; as local economy, population growth, and similar factors can play a big role in the overall success of your investments.
The neighborhood, dictates rent, indicates current rent pool and provides insight on properties in immediate proximity to your investment.
Things like vacancy rates in the neighborhood and surrounding home values may also impact your property and its ability to generate positive cash flow. Also consider other factors—is it close to a college or university, which increases the likelihood of student tenants, which increases turnover rates and summer vacancies? These are things to consider.
Broader, but no less important: is your property near where jobs are? If people are coming to work, people are coming to rent. If a major company is moving in or building a factory for example, look for properties within a 30-mile radius or so. People go where the jobs are. (AMAZON!!)
One of the more obvious things on this list is to avoid high crime areas. Both the police and public libraries should have records of crime in the neighborhood, which are more reliable than asking the person you’re trying to buy a property from. You can also look for signs of vandalism and abandoned properties that could house squatters. See, too, if the neighborhood has a Neighborhood Watch program and how frequently the police patrol the area.
While single-family homes don’t have amenities in the same way multifamily properties do, what they can have is proximity to great amenities. How close is your property to shopping, restaurants, nightlife, and parks? Is it convenient for grocery shopping? Interstate access? Think about these things.
First things first: layouts are not permanent. They can be changed through renovations. That said, such renovations can be expensive. Why does layout matter, you ask? Some homes, particularly older ones, can have very strange layouts that can just be downright off putting to tenants and, down the road, buyers. If the layout doesn’t make sense, it can be difficult to live with and live in, which may deter tenants from staying. A harmonious living space that makes tenants feel comfortable—not confused—is ideal.
Ideally, we keep tenant turnover down. We also recognize we’ll have multiple tenants in our time in each property, and those tenants will have different needs and sizes in their families. Does your property have enough space? While you don’t need a property with six bedrooms and four bathrooms, chances are a one-bedroom property isn’t going to be enough for most tenants.
A property with ample space to accommodate the largest pool of tenants is ideal. Between two and three bedrooms is typical, with at least two full bathrooms.
Some property defects are acceptable. Superficial damage can be fixed, and even small repairs and renovations aren’t a big deal. But there are some problems that should bring you to pause: significant foundation problems, severe water damage, dangerous molds, or structurally unsound or unfinished properties are all reasons to bail unless you’re a flipper. Don’t take on a massive renovation when you’re looking for a buy and hold investment.
No, your investment properties don’t have to be pristine, high-end or even particularly beautiful to be profitable. Aesthetics still plays a role and curb appeal still matters in attracting and keeping tenants. Ensure that your property stays neat, attractively painted, well-maintained, and clean.
If you want to take the guesswork out of acquiring properties and want to dive straight into earning passive income, turnkey real estate investment is for you!
Give True Loyalty Properties Acquisitions team a call at 571-406-3233.