Tips and practical insights about finding, financing and buying rehab rental property.
Knowing how to look for rental rehab property, what to look for and how to buy it can be a daunting task for a new landlord. Following these basic tips and strategies will help you on your way to becoming the landlord you have always wanted to be.
Finding the Right Property
Finding good, rehab potential property takes a little work. It’s not as easy as opening the newspaper and looking at the classified ads, or buying a “get rich with real estate” scheme. Diligence, hard work and knowing the right way to look are what will make you successful. In order to be successful you must change the way you think.
Before telling you how to find properties, I want to dispel a couple of myths that most people believe.
Myth #1 Location, location, location
I hear it over and over. Many people believe the location of a rental property will support its success as a money maker. This is just not true. Buying rehab property in a poor neighborhood in town will cost you a lot less than in a posh neighborhood, and it will bring in exactly the same amount of rent if you rent to tenants with subsidized rents (welfare, Section 8, government assistance, etc.).
Myth #2 A 2 bedroom will be quicker and cheaper to rehab
Again, not true. The cost of rehabbing a 2 bedroom will be about the same as a 3 or 4 bedroom house. The increased rent a 3 or 4 bedroom bring make a 2 bedroom look sheepish in comparison. Stick with 3 and 4 bedroom rehabs. Unless the 2 bedroom is a steal and a turnkey (ready to rent today), forgo the idea.
Now that location and size are established, it’s time to start looking for your property! Great rehab potential houses are never listed in the classified ads. Even if they were, they would be gone (if they are that great of a deal) before you even pick up the phone. You have to look for them. Go for a drive through a neighborhood that has boarded up houses. Those houses are perfect for rehab! To begin your quest, follow the simple instructions below:
Identify a board up and get out of your car to look. Never mind broken glass, windows, garbage and the need for a new roof. They all need those things. What you are looking for is a solid house frame. The rest can be dealt with.
Take a picture of the house. Note the address in a notebook. Make little comments and notes to help you remember which house this is.
Don’t worry about abatement signs or similar. All that means is that the house is not up to par -- but you already know that. Note any phone numbers or names on sticker that might be on the door. This can save you a lot of time later!
Continue looking, writing down addresses, taking pictures and making comments until you have several potential houses.