A.D. Cantelmo Property Management
Our Business is Property Management in Orange County California
Where should I buy rental property?
People who want to get in to the home renting business
should do a tremendous amount of research into the business. If you have never
dealt with Tenants and the rules that need to be followed then it can be an eye
opening experience. Of course, not to be self serving, but I think that if you
want rental property and you don’t want to deal with the issues that go with
it, then Property Management is the way to go, but that being said, where to
buy the property, is the most important decision you will make.
Who owns rental property?
There are many reasons that people get into the rental
business, one reason is, that they are moving and can’t or don’t want to sell
the home they are in, another is that they inherited a property with Tenants
and now find themselves Landlords and of course there are the investors who are
looking for another way to invest their money. The investors are the ones I
want to address in this article.
Time to shop
Once you have decided that this is a good place to put your
money and you understand the business itself, it is time to find the property.
Now looking for investment property that you are going to have Tenants live in,
is much different than looking for a home for yourself. The problem that many
people have is that they look for a property that they would want to live in
and they don’t think about why people who rent, look for the houses and the
area they want to live in. Now of course if you buy near the beach that is
going to be a whole different market then if you buy in the mountains. But
putting the specialty markets aside, and understanding that for most people who
want to buy their first rental property, money usually a large part of the equation,
let’s take a practical view of finding a property for rental purposes.
Type of Home
From a practical stand point and if your finances can make
it happen, a single family home is going to be the best place to put your
money. A condo or townhome is an option, but then you have to deal with other
issues that come with living in a home owners association and that can be
problematic at times. That being said if a condo or townhome is what you can
afford, then so be it, but let’s concentrate on the single family home for our
discussion today.
Single Family Home
When you look for the home, and going back to the Home
owners association, you want to avoid buying the home in an HOA if possible,
again trying to make things as simple as possible. The best thing to do is look
for a 3 or 4 bedroom Home with at least 2 full baths and when I say 2 full
baths, you can get away with one of the bathrooms having just a shower, but you
want to make sure that there are 2 bathroom that people can use for all
purposes. Many older homes that were built in the 50’s and 60’s are great
houses, but they sometimes only have one or one and a half baths. The second thing, unless you are a do it
your selfer or money is no object, do not buy a fixer upper. Unless you are an
expert at this, it can be a disaster. When you buy your rental property you
want what we call a “TURN KEY” property, which means when escrow, closes, you
want to be able to turn the key in the front door and the house be ready to
rent.
Potential Tenants
A 3 or 4 bedroom single family home gives you many options
as far as potential Tenants. It opens it up to families with children, a
couple, or couples or single renters. Also if you have a yard, remember as much
as some investment property owners try not to allow pets, I have seen studies
that about, 70% of people have pets, so a yard also opens that door up to you. The
more options, the better.
Location, Location, Location!
In every business, Location is key to sucess, and in my opinion, the number one best location to buy rental property is near
a good school district. People who rent property and have children look past
many things your property may be lacking if they want to live in that school
district. Those renters are also good potential long term renters.
The next best location is centrally located. If your
property is near shopping, freeways (Not too close) and employment
opportunities, then that property will also be desired buy certain renters.
A location near a college is also good, but only if you are
willing to deal with short term and roommate situations. But you can get very
good rents and also you can have parents in many situations be responsible for
the rents and other potential expenses. I have known many people who have
children in college, buy a property near that college and have their children
live there and rent out the other rooms to help pay for the mortgage. I will
admit, you need to walk a fine line when dealing with students, you can’t be
too hard, but you also need to be very attentive and understand the lifestyle
of the college student. You may want to
lay down some extra house rules, but that is another topic.
These three locations will give a new comer to the rental
business a good road map on where to find their property. If I had to pick one
of the three, I like buying near the good school distinct, but the other two
can work. Once you decide the location, do your homework and find a Realtor who
understands what you want and also understands the rental business, that way
you will be working from the same page.
A.D. Cantelmo Property
Management Specializes in Property Management in Orange County
Ca.