So when it comes time to buy a house (I'd like to find a fixer-upper and rent it out) what are some things I should keep an eye out for? Maybe some major do's and don't's. I'd like to see how an experienced investor looks at certain things when buying a house. Obv, there are some investors out there that don't mind having major renovations when looking for a house, BUT, since I'm new and don't have a boatload of capital to throw into a house I'd like to hear some ideas of how I should approach deals and what to look for.
@Michael Donato If you don't have a lot of money to put into the house, I wouldn't buy a fixer upper. Start with something that needs cosmetic work or no work.
It all depends on your knowledge and risk tolerance. I’d never buy a fire damaged home (I don’t have the contractors nor knowledge) but some people do quite well in that space.
But in general, you want to stay away from properties with issues with ‘unknown’ resolutions. For example, if a kitchen needs new cabinets and countertops, you can go to any store, pick some stuff out and get a price for materials and installation. Hard work - but easy enough. Compare that to a mold/foundation/septic issue. You can’t just call someone up and get a price. It depends on 100 different things and even once you start working on it, there may be another 100 things that make it harder and more expensive.
This stuck with a house that needs carpet, paint, maybe some other touch ups. As soon as you start opening walls, your costs, timeline, and aggravation levels can skyrocket!
@Michael Donato Stay away from properties that will need cap x expenses(roof, AC, etc...). Only go for those when you’ve built up some reserves. Go for something with that is currently rented, in a solid area, and a decent return. Don’t be greedy on your first. Be logical and learn the game.
I stay away from certain layouts. I’m not a fan of homes that require you to walk through a bedroom to get to the only bathroom, or a second bedroom. I’m not too fond of homes off busy, main streets either.
You will find the more you buy the fewer things that will bother you. I, too stay away from fire damaged houses. I used to fear subfloor issues for some weird reason. I hate garage conversions. I generally don't like the way they look and often they are finished poorly. The one I pulled the trigger on has been nothing but trouble. I also tend to avoid pools and fireplaces because I don't want the maintenance or liability of either.
Also, bigger isn't always better especially when you are just starting out and try to do things yourself. Bigger can often mean more wear and tear as larger families will be attracted to it. There is also more to break and more to paint! My husband and I have 11 units and are at the point where we pay someone to do most anything except the property management and bookkeeping which is in my wheelhouse. Last year, we were going over budget on a reno on a 1700 sq foot house built in 1958. A couple of walls had been opened up by the previous owner, but it was mostly a closed floor plan. My husband and I decided to save money by painting it ourselves. It took 2 days and I even camped on the hardwood floors. I fared ok, but my husband about died (exaggerating just as he did). I didn't realized 35 was that much older than 29(the last time we camped at a rental).
Thank you guys, these are all very helpful!