What I look for when purchasing a rental
I just visited 3 properties this past weekend. I primarily look at 3 types of properties for sale:
- Short sales
- Distressed sellers
In all cases, every house has issues and that's just how they come, so I want to make sure I know exactly what I'm getting into. This process is generally about the same everywhere, but there are regional differences because of the climate (WI has a lot of freeze/thaw and that can impact things) as well as how structures are built (we have basements which some areas don't have as well as concrete block foundations whereas some have stone or poured concrete).
The properties I buy are for rentals, so that also plays an impact. If you were buying for flips you might have different criteria.
Here is how I scope out a potential property:
When I view a potential rental, I arrive outside and so I look at the outside first. I check out the roof -- what is the condition? Do the shingles look to be in good condition or is there signs of excess wear? Are there any trees next to the property that could be causing damage to the roof or giving an avenue for squirrels or other animals to get on the roof? (Squirrels may look cute but can really cause a bunch of damage!)
Are the gutters in sound condition or are they hanging incorrectly, bent, or in any type of disrepair? Are they clogged up? Are any downspouts missing? If so, where does the water seem to be heading?
Are the porch and steps in good repair? Are they going to need to be repaired and/or painted? Are the railings present and in good condition or will they need to be replaced? These are code compliance issues that need to be done.
I generally don't look at properties that don't have garages. A garage is an amenity that many renters like with a SFH and if I'm going to sell the property at some point a garage is something people will want.
So when I check out the garage, I look at the roof there just as I would the house roof. Many times I have seen that the house roof may be okay, but the garage roof isn't. Even when I purchased my own home, this was the case.
Also I check out the siding and see if there are any holes such that animals might have been able to get in. I check the service door for damage or if it operates properly. I check the main garage door -- many times they have those particle-board doors that are very worn at the bottom due to being next to snow. Then I know those will have to be replaced with a steel door because otherwise they wouldn't pass code compliance.
Finally, the interior. Do the walls look sound from the inside or can I see sunlight through the walls? Are the windows secure?
Then when I head inside, I go straight to the basement. I check out the foundation and see if the walls have cracks and such and if they appear straight or if there is bowing. Is there standing water or signs of past water seepage? (Houses in this area have block wall basements.)
I check out the age and condition of the furnace and water heater (as long as I'm already in the basement). The water heater is the least costly of a major repair itself, but I also check to make sure the plumbing is in place and if there is any missing copper (a common issue for foreclosures and that is a lot of what I look at).
One area of missing copper is the ground line running from the circuit breaker box to the water meter. If there is a circuit breaker box -- I have purchased a property that had fuses and had to get it changed out.
The basics in the kitchen -- what condition are the cabinets? Does the floor need to be replaced? Most of the time there are no appliances so those are not an issue.
What condition is the tile around the shower? (One property I purchased had tiles falling off the wall, so those did need to be completely replaced.) If there is a window in the bathroom, is it right inside the shower? If so, does it have a wood frame which means it needs to get switched out to glass block? (You think that sounds silly but it really is a reality here.)
Most of the time the tub and vanity are in good shape. Some tubs are still the old cast iron ones that if you wanted to get rid of them, you'd have to smash them with a sledgehammer or get two very strong people to carry it out.
I also step around the toilet and check the floor for past water damage. I have purchased 2 properties where the subfloor was damaged and had to be replaced before putting in new flooring.
How are the windows in the property? Are they old wooden frame windows, or newer vinyl windows? If they are older, how many?
Lastly, it's the cosmetic stuff -- is there carpeting that needs to be replaced, painting that needs to be done, light fixtures to replace, wallpaper to remove, etc. Painting is the least of my concerns. I have purchased properties with really wild colors on the wall such as lime green and fire engine red (with a large flower painted in some type of glitter). Just means primer before painting. But paint is cheap!
I'm sure I'm not hitting every last minute thing I look at, but you get the picture. Overall, I don't care so much about how "ugly" a place is inside, as long as the cost to get it up to rental-quality standards, plus taking care of any code compliance issues, is going to make sense. And the less money out of my pocket the better!