Going to look at rental properties! Nervous/excited! Any tips/advice?

Question

Hello all! I have been doing much reading and studying on real estate and found my niche which will be investing in a 2 family rental property. I will be going go to check out a few homes in a few days. I am nervous/excited at the same time. Still doing research/taking notes. Any tips/advice for what I should be doing when I go check out the properties with my RE Agent?

Mike Hurney · Answer

@Eric DeVito You should be out with all this snow, looking and getting offers ready. Things are starting to heat up again.Staying organized is important but looking at ONLY Property you want and can afford is Number 1!

Douglas Snook · Answer

Ask in advance if there are tenants and if there are leases, what the rents are etc.. You may not be able to see the lease until you make an offer but at least you will know. If the property is vacant, check Craigslist etc to find out what you can reasonable expect the rent to be, don't just rely on your realtor but ask around. I don;t know what they have in New York for landlords but in Boston you can get a book about being a landlord, lease agreements and other forms. You want some of those NOW so you are familiar with them and the landlord/tenant law. Something to find out about on your viewing is how the utilities are set up. That will effect what and how the tenants are charged. For example, is there one one oil tank and furnace that both units share? Is there only one electric meter? In MA there should be three meters for a two family, one for each unit and one for the landlord for common areas. Can these issues be fixed or changed, yes but its something to know going in.

Ali Boone · Answer

Make sure you know how to run numbers and calculate returns on properties! The agent likely won't know all of that.

Patrick Hepner · Answer

Typically you want to have the tenant pay things that they directly influence through the amount of use: water, electricity, gas. This way you don't get surprised with their 180.00 electricity bill. Also, if you need to evict and are on bad terms for that last month, they don't turn the heat up to 89, leave all the faucets / lights on etc.Garbage removal and general maintenance are typically on you.

Jean Bolger · Answer

@Pat Parrillo I have the Property Evaluator App as well and I love it. I also have one called "Happy Inspector' that is intended for property mangers to use for move in/move out inspections. I've never used it much (because it's a little fussy) but I could see it being a great way of keeping track of conditions in different units, etc during your inspection/due diligence period.

Scott Weaner · Answer

YOU decide who pays what. If you purchase a home with a tenant in place, you can't change the lease, but in the future you can. My goal is to have the tenant cover as much as possible. That is why I look for side-by-side duplexes, as I can have the tenant be responsible for 1/2 of the property. I don't have to worry about snow and grass. If you have to do that maintenance, you need to account for it in your calculations.I like Free Real Estate Analysis to analyze properties.Be sure to post any potential deals in the analysis forum. We can help you with that as well.

Eric DeVito · Answer

Thank you all for the advice, I will def be bringing a notepad and jotting down notes. I will try to take photos with my phone as best as possible. Also in regards to what I as the owner/landlord of the potential property, how do I know what I have to pay and what the tenant pays? For example do I cover electricity or the water bill or does the tenant? Who makes that decision?

Pat Parrillo · Answer

I agree with @Jean Bolger about once you see several properties you will start to mix them altogether in your head, at least I do as well. On top of taking pictures I also record notes about the house on my phone, what type of updates need to be made, impressions of the property etc. That way you can always go back and review your initial reactions to the property. Another tip to be clear in your strategy. It sounds like you have narrowed it down which is good as this will help a great deal in narrowing your search. There are a lot of properties out there, not all are good investments or one's that may align with your investing goals. The more clearly you can define what you are looking for the easier the search can be. Lastly, run your numbers and be conservative. I like to use Real Estate Tools Property Evaluator to run numbers quickly, there are a ton of tools out there, that's one I like. Best wishes!

Jean Bolger · Answer

If you look at several properties it is easy to get details about them mixed up in your mind later. So when you get to a property, take a photo of the front of the building that shows the address. Then take pictures of interior, exterior, etc, (with special attention to things that are questionable or may need work). If you remember to start with that photo of the address each time you'll be able to sort the photos properly to help you remember which details/issues went with which building.Also, don't be in too much of a hurry to buy and end up with a less than good deal!

Kyle Penland · Answer

Some advice I can give is have the right agent. Someone who understands investing. For example the agent I used to purchase and sell my personal home told me that as long as I got enough rent to cover the mortgage I should be good to go for buy and hold strategy. WRONG!! Just make sure your agent knows what your goals are. Also take a notepad, note damage, repairs, deferred maintenance etc. most important thing is understand also what you will be responsible for. Desperate water meter, trash, etc. good luck! Let us know how it goes!