Finding the right rental property is not an easy task. Sure, you’ll run across many people who claim they found their rental properties without even looking, but those cases are the exception, not the rule. Every landlord has a different goal. Today many rental property owners are looking down the road at retirement when they expect to sell all of their properties and retire. Some rental property owners just look at the monthly income with no concern over what will happen next year or ten years from now. It’s up to you to determine your goal from investing in rental properties.
You’ve heard it said before, and the same rule applies to rental properties: Location, location, location. You must learn all you can about the location of any property you consider adding to your rental property portfolio. If you live in a rural area, chances are you really don’t know much about the apartment buildings downtown. If you’re looking at rental properties in a town other than the one in which you live, assume you know nothing about the area. How do you learn about a specific area? If you decide to drive by a property and see what the area looks like, make sure to do so both during the day and at night. Visit the area during a quiet weekday but also on Friday or Saturday night. Even the quietest neighborhood might turn into a war zone on the weekend.
The two best sources of information about a neighborhood are elderly residents and the local police. We’ve excluded realtors, which we’ll cover shortly. Elderly residents who have lived in an area for years can provide valuable insight that few people can. They’ll let you know if the area used to be nice but has recently gone to hell in a handbasket. They’ll probably know if almost everyone in the area is on welfare or doesn’t pay the rent on time. Many senior citizens don’t live by the rule of “see no evil, hear no evil, speak no evil.” They’ll tell you like it is. Local law enforcement and firefighters will also tell you like it is. They know the area better than anyone. Simply mention that you’re thinking about buying the apartment building at 123 Main Street and see what the officer or firefighter has to say.
Realtors are often accurate in their opinion of areas but not always. Realtors always try to sound positive because they work on commission. It’s doubtful a realtor is going to suggest that you avoid purchasing an apartment building when he or she stands to make $10,000 commission selling it. Some realtors have an optimistic outlook that often doesn’t coincide with reality. For example, a realtor might say that an area is being cleaned up. What that really means is the area is currently crap. Cleaning up a troubled area often means relocating all of the residents and renovating or demolishing every building in sight.
How do locate rental properties you might want to consider purchasing? There are multiple sources of information and several methods you can use. The most obvious source would be real estate listings. Most rental properties are listed in the Multiple Listing Service or MLS. If you do decide to peruse the MLS listings, remember the obvious. Most real estate agents are also investors. By the time you spot a rental property listing on MLS, chances are ten or more real estate agents have already seen the listing. If seasoned realtors don’t want the property, do you? You can also find rental properties on websites such as CraigsList or Zillow.
One of the best methods to locate rental properties is to simply drive around. If you might end up owning several of the rental properties in an area, get in your car and drive around. Apartment buildings are easy to spot. Look for multiple utility meters on the outside of the building. In many areas, rental properties seem to be located on specific streets or in certain areas. It’s rare to find an apartment building in an area of single-family homes but they do exist. As a general rule, if you locate one apartment building, chances are there are more located nearby. Once you’ve ascertained the address of at least one apartment building, then you have a starting point for searching the online listings or for consulting with the local police or fire department.