Checklist for Purchasing Rental Property

[Kenneth Kafieh]

I am trying to build a checklist. What are your criteria when deciding to pull the trigger on purchasing a rental property? Red flags? Please add your own list of considerations, both major and minor.

I am very new to REI and this is my first post but hoping this thread will grow and form a good basis or maybe even a comprehensive checklist eventually.

Below are some of the things that I can think of so far.  These may not all apply to you or you may not agree with some.  Also, some points here are the responsibility of an inspector or realtor but are important enough to double check IMHO.

I am surely missing a ton of things.  What can you add to the list?

• Does property meet your minimum ROI standard?
• Is vacancy rate for the area/neighborhood low enough?
• Have you surveyed rent in the area with comparable properties to verify the rent you expect is reasonable?
• Is property new enough? Prefer properties that were built in the post-asbestos era.
• Is unemployment rate in area high?
• Is the USD soaring too high right now? This is mostly for a consideration for us canadians
• Is there property management available in area? More than one choice?
• Is rental demand in the area likely to be sustained? (eg. Unit is in a coal mining town when solar might soon hurt coal industry employment) Demographics changing? Population decline? university/college nearby?
• What class of neighborhood is this ? Avoid war zones and even “C-” class neighborhoods
• Is this a high crime area?
• Building condition
  • Mold or musty smell in basement?
  • asbestos?
  • Environmental toxins
  • Is surrounding ground sloped away from building?
  • House waterproof?
  • Roof
  • windows/door jams
  • basement?
  • Furnace age?
  • Water heater?
  • Plumbing condition?
• Back taxes owed on house?
• Good Location
  • Schools nearby?
  • Landlord friendly state?
  • Security deposit rules
  • Ease of eviction