So, you’ve decided it’s time to purchase an investment property. How do you know if it’s a good rental?
There are a couple basic items to consider when looking at an investment property. Just like in real estate, rentals are about location, location, location!
If you are considering a full-time rental property, is it close to schools, shopping or allow for easy commuting? If you are looking at a vacation rental, what is the draw for that area and why do people visit? Is there a golf course, beach or another attraction that brings people to the neighborhood consistently? Even a retirement community? Find out what it is and utilize that.
The closer you are to an area where homes are in high demand, the better. Consider this the proximity factor, and it works in your favor. It will bring you more tenants to choose from and it will mean that your vacancy rates will be much lower when they do occur.
Talking to an agent who specializes in investment properties will also give you a good idea of what to expect. If you are looking to purchase an investment property, find an agent who knows the rental market and real estate sales! Lots of agents can tell you what a good deal is for a purchase price, but can they tell you what the rent and expected vacancy rates will be?
I will tell you that homes south of the Country Club on Camano Island are not ideal rentals. The drive time is too far out for most people, so rents are much lower and they stay vacant longer. Homes around the Church Creek area in Stanwood and the historical area in Arlington are perfect rentals. The price of these homes, proximity to schools & shopping are ideal for long term investments. The demand in these areas is consistent year round. Most agents don’t know or even want to know the rental market, and that’s ok. Just find someone you can trust who does.
Find a well maintained home or plan to fix it up. A run-down appearance only means lower rents and lower quality tenants. It is worth your while to spend a couple dollars and spruce it up a little. I don’t mean installing new granite counters or anything along those lines, but it needs to be habitable. Renters are still people, lots of times with families and kids. Would you want your kids crawling around on carpet from 1970?
Finally, talk to an accountant. Make sure that the anticipated income is realistic and will cover your insurance, purchase price and maintenance fees.
If you are considering an investment property in Northern Snohomish County or on Camano Island, let me help.
Jen Hudson, GRI (360) 652-1200 or jen@hudsoncreg.com
First time investor? Some things to think about.