5 Not-So-Obvious Qualities to Look For in Long Term Buy & Hold Properties

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You’re a rental property investor. You’d like to purchase a house you can own for a very long time. Ideally, it will maintain its value and have minimal repairs and maintenance. It should also be located in an area that has strong tenant quality and gives you a healthy cap rate and cash on cash return.

Sound like a lot to ask? We know, we know, you can’t have everything, but there are certain things you can look for when trying to buy a great home for the long run. There are different factors to consider when you’re searching for a home you plan on holding for a decade or more as opposed to a house you’re looking to flip within a few months.

If you’re a long term buy and hold investor, here are a few general pointers you may want to consider as you’re searching for properties.

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A Small Disclaimer

Before we get into this list, let me give this disclaimer. Like any good rental investor, you should pay close attention to factors such as neighborhood, tenant quality, capitalization rate, cash on cash return, growth rent multiplier, etc.

Those are outside of the scope of today’s article, but we want to gently remind you not to pull the trigger on a rental property unless you’ve adequately taken these factors into account.

This particular piece of advice is for new investors or beginners. With that disclaimer out of the way, here are 5 qualities to look for in long term buy and hold rentals.

5 Qualities to Look For in Long Term Buy & Hold Properties

1. Hidden Plumbing

You should look for a home that has rough-in plumbing and electrical wiring in a space like an unfinished basement or attic. This gives you the opportunity to easily add an extra bedroom or expand the property in the future if values in the neighborhood justify those costs.

Related: Slow & Steady Wealth Building: A Case for Holding Long Term Rentals

2. Adequate Parking

Unless you’re investing in a specific neighborhood where tenants accept the reality there won’t be parking, there’s a good chance they’ll be asking about it the moment they see the property. Look for homes that have enough parking to fit two to three cars. This ensures there’s enough parking for the entire family.

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3. Ample Land

Look for a house that’s located on enough land that you have room to expand in the future. The structure shouldn’t necessarily run right up to the edge of the setback that’s mandated by the city or towns zoning requirements.

Of course, there are exceptions to this rule, the primary one being urban areas. If you’re buying a rental property in an urban landscape where the underlying loss is worth a substantial amount of money, then you may not want a generous setback.

After all, vacant land is overhead. It’s a nonperforming asset. On the other hand, ample land out in the suburbs or countryside could be a selling point, as it might make tenants feel more favorable about the home. As a bonus, it also gives you the opportunity to expand in the future.

4. A Level Lot

All else being equal, it’s best to look for homes that are constructed on a level lot. Pay particular attention to whether or not the driveway is sloped or angled.

If your tenants are scraping their cars every time they pull in and out of the driveway, you’re setting yourself up for some unfavorable first impressions. If your property is located at a low point, a sloped lot could also increase the likelihood of water problems.

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Related: A Step-by-Step Guide to Start Investing in Real Estate Long Term

5. An Easily Accessible Basement or Crawlspace

If you plan on owning the home for several decades, you’ll undoubtedly need to access the basement or crawlspace. Reinforcing the foundation or repairing some type of mechanical issue will require access. A crawlspace that literally requires you to crawl isn’t going to be fun for anyone.

Don’t pass up a great investment opportunity for the simple fact it has a small crawlspace. All else being equal, in a perfect world you’d find a great house that has a large, easily accessible crawlspace.

The Takeaway

If you need more information about what to look for in a rental property you’re going to own in the long term, talk to a mentor, friend, investment group, or an experienced real estate agent who can help you make the right decisions.

About Author

Joshua Keen

Joshua and his brothers have worked as Atlanta real estate brokers for more than 15 years. As real estate investors themselves, they are experts in helping investors navigate the dynamic real estate landscape of the metro Atlanta and Decatur, Georgia area, particularly the Intown Atlanta neighborhoods. When Josh isn't following the Atlanta real estate market, you'll find him running, playing with his dogs, or hanging out with his family.

12 Comments

  1. Patrick Desjardins

    The level lot thing is good to point out.

    A lot of houses where I’m located have basements and the slopes cause hydrostatic pressure – water going down the slope pushing against the foundation.

    Obviously it can be mitigated with good drainage but I wiuld avoid it if I could.

  2. Darren Sager

    Great article Joshua. I always look at water flow around a property and I don’t mean if there’s a stream or river nearby. I look at the ways the water will leave the property or come onto the property during a hard rain or extended period of rain as this can lead to so many other problems down the road for the structure, the hardscaping and the landscaping. If I don’t understand how I can control this then it’s usually a big red flag for me and I’ll look for other signs on how the property is dealing with the issue. Perhaps a sump pump in the basement, french drain around the perimeter, etc. Water causes the most damage so it’s always on my radar!

  3. Darren Sager

    Great article Joshua. I always look at water flow around a property and I don’t mean if there’s a stream or river nearby. I look at the ways the water will leave the property or come onto the property during a hard rain or extended period of rain as this can lead to so many other problems down the road for the structure, the hardscaping and the landscaping. If I don’t understand how I can control this then it’s usually a big red flag for me and I’ll look for other signs on how the property is dealing with the issue. Perhaps a sump pump in the basement, french drain around the perimeter, etc. Water causes the most damage so it’s always on my radar!

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