{"id":163738,"date":"2023-12-29T07:00:00","date_gmt":"2023-12-29T14:00:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=163738"},"modified":"2024-02-08T15:33:19","modified_gmt":"2024-02-08T22:33:19","slug":"what-to-look-for-when-buying-a-rental-property","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/what-to-look-for-when-buying-a-rental-property","title":{"rendered":"What to Look for When Buying a Rental Property (7 Considerations)"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC9631322535\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p>Knowing what to look for when buying a rental property will save you time and money while reducing stress. In this article, we outline seven considerations that you can\u2019t afford to overlook.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consideration 1: Location<\/h2>\n\n\n\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/breaking-down-the-location-location-location-principle-in-real-estate\" target=\"_blank\" rel=\"noreferrer noopener\">Location, location, location<\/a> is consideration No. 1 when buying a rental property.&nbsp;<\/p>\n\n\n\n<p>Is the property close to amenities such as shopping? How about public transportation? What about local schools? Is the area safe? Is it family-friendly?&nbsp;<\/p>\n\n\n\n<p>Know which location(s) meet your requirements, and only consider properties within those areas.&nbsp;<\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_658c53d032ce4: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_658c53d032ce4\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/what-to-look-for-when-buying-a-rental-property', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/what-to-look-for-when-buying-a-rental-property',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/what-to-look-for-when-buying-a-rental-property', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Consideration 2: Property Condition<\/h2>\n\n\n\n<p>Assess the property&#8217;s age and current condition to estimate ongoing maintenance needs and potential renovation costs.&nbsp;<\/p>\n\n\n\n<p>You must factor in the cost of upgrades or repairs to meet market expectations and enhance rental appeal. Should you require assistance, consult with a <a href=\"https:\/\/www.biggerpockets.com\/blog\/contractor-questions\" target=\"_blank\" rel=\"noreferrer noopener\">contractor<\/a> and\/or home inspector for professional guidance.&nbsp;<\/p>\n\n\n\n<p>This careful evaluation helps you forecast long-term profitability and maintain a competitive edge in the local rental market.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consideration 3: Market Rent Rates<\/h2>\n\n\n\n<p>Investigate local rent rates to gauge the property&#8217;s earning potential. From there, compare these rates with similar properties in the area to calculate competitive pricing.&nbsp;<\/p>\n\n\n\n<p>Understanding market trends ensures your rent aligns with tenant expectations while maximizing your income. Regularly monitoring these rates helps adapt to market changes and sustain profitability over the long term.<\/p>\n\n\n\n<p>Tip: Our <a href=\"https:\/\/www.biggerpockets.com\/rental-property-calculator\" target=\"_blank\" rel=\"noreferrer noopener\">rental property calculator<\/a> comes in handy here.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consideration 4: Legal and Zoning Regulations<\/h2>\n\n\n\n<p>Don\u2019t assume that you know the legal and zoning regulations in the area you\u2019re buying. Instead, you must do two things:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Verify that the property complies with local zoning laws.<\/li>\n\n\n\n<li>Understand landlord-tenant laws, including any rent control measures.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>Compliance with all regulations is crucial to avoid legal complications and ensure smooth operation of your rental property.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consideration 5: Tenant Demand<\/h2>\n\n\n\n<p>Without research into tenant demand, you may believe that you\u2019ve found the perfect rental property. However, additional research is always needed to ensure that tenant demand is there (and is likely to remain).<\/p>\n\n\n\n<p>High-demand areas often yield better rental rates and lower vacancy periods, contributing to a more stable rental income. Conversely, low-demand areas are hypercompetitive and have high vacancy rates.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consideration 6: Financing and Expenses<\/h2>\n\n\n\n<p>Examine financing options and calculate total expenses, including your <a href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-mortgage\" target=\"_blank\" rel=\"noreferrer noopener\">mortgage<\/a>, taxes, insurance, and maintenance costs. While you may not have exact numbers, depending on where you are in the buying process, accurate estimates are a must. With these numbers in hand, you can better choose a financing plan that aligns with your investment goals and cash flow requirements.&nbsp;<\/p>\n\n\n\n<p>During ownership of the property, regular financial reviews help you effectively manage costs and maximize return on investment. For example, you may find that <a href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-refinance-your-mortgage\" target=\"_blank\" rel=\"noreferrer noopener\">refinancing<\/a> your property allows you to save money on interest. Or perhaps a <a href=\"https:\/\/www.biggerpockets.com\/blog\/heloc-vs-home-equity-loan\" target=\"_blank\" rel=\"noreferrer noopener\">home equity loan<\/a> positions you to purchase another property.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Consideration 7: Future Value&nbsp;<\/h2>\n\n\n\n<p>One of the primary <a href=\"https:\/\/www.biggerpockets.com\/blog\/12-benefits-of-real-estate-investing\" data-type=\"link\" data-id=\"https:\/\/www.biggerpockets.com\/blog\/12-benefits-of-real-estate-investing\" target=\"_blank\">benefits of real estate investing<\/a> is the potential for <a href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-appreciation-in-real-estate\" target=\"_blank\" rel=\"noreferrer noopener\">appreciation<\/a>. While there\u2019s no guarantee of this, history shows that there\u2019s a good chance your property will gain value over the years.\u00a0<\/p>\n\n\n\n<p>When buying, consider the property&#8217;s potential for appreciation based on past market performance. Do the following:<br \/><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Analyze market trends and future development plans in the area that could enhance property value.<\/li>\n\n\n\n<li>Evaluate economic stability to determine the growth prospects of the region.<\/li>\n\n\n\n<li>Monitor housing market indicators such as supply and demand and foreclosure rates.<\/li>\n<\/ul>\n\n\n\n<p>Your goal is to generate a positive <a href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-roi-in-real-estate\" target=\"_blank\" rel=\"noreferrer noopener\">return on investment<\/a> (ROI) month after month as a landlord, while also owning a property that appreciates. This will make your investment well worth the money.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Final Thoughts<\/h2>\n\n\n\n<p>These are seven of the most important considerations when buying a rental property. While other details will come to light along the way, an early focus on these will point you in the right direction.<\/p>\n\n\n\n<p>Are you ready to take the next step? Before beginning your search for the perfect property, <a href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-buy-rental-property\" target=\"_blank\" rel=\"noreferrer noopener\">read our eight-step guide<\/a>. It provides even more information on how to make an informed, confident investment.&nbsp;<\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_290e0acf0988ef9623bbdc2e318dea37\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_397c478c79a12711bafc27e7253e65d6\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_afaad5fc6017733be30479c455440c92 class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/agent\/match\"\n        x-on:click=\"window.analytics.track('Blog Block | B2C Marketplace Agent Finder', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/what-to-look-for-when-buying-a-rental-property',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"2\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/signup\"\n        x-on:click=\"window.analytics.track('Blog Block | Acquisition | Free Membership Signup', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/what-to-look-for-when-buying-a-rental-property',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Knowing what to look for when buying a rental property will save you time and money while reducing stress.<\/p>\n","protected":false},"author":613667,"featured_media":163741,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7390,7119,7380],"tags":[],"class_list":["post-163738","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-acquiring-property","category-biggerpockets-daily","category-long-term-rentals"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/163738","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613667"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=163738"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/163738\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/163741"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=163738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=163738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=163738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}