3 Problems I Avoid When Shopping for a Rental Property

by | BiggerPockets.com

The following are three problems I try to avoid when I look for a rental property. This isn’t to say I will never touch a property that has one of these issues, but there better be a really good reason for it, and I would have to factor it into my numbers.

3 Problems I Avoid When Shopping for a Rental Property

1. Neighborhood

You cannot easily fix a neighborhood. Sure, you could join the local city council and start a neighborhood watch, but the neighborhood is not likely going to change because you want it to. Therefore, I don’t want to buy a property where the neighborhood will always be an unsolvable problem.

Related: How to Weed Out the Top Tier Tenants From the Rental Destroyers

The property will continually be difficult to rent, the tenants will trash the house, I’ll have to deal with evictions and late rent, and in the end, the property’s value may never increase (and might actually decrease). I’m not saying I will only buy in a Class A neighborhood, but I’m definitely not going to buy in a Class D area.

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2. Foundation Issues

Foundation issues scare me because they can be a money pit to fix, and the cost of a solution can sometimes eclipse six figures. This is especially true with foundation issues on a house with a basement or slab. I would also put any property that has water leaking in the foundation in this problem category and steer clear. Yes, there are investors who specialize in properties that have bad foundations, but for me, the risk is too great.

3. Shared Driveways

I once bought a nice house in a nice area that shared a driveway with a neighbor’s house. Literally, the two houses were 20 feet apart with the driveway in between, split evenly down the middle into “their side” and “my side.” When I bought the house, I didn’t see any issues with this situation, but within a few months I learned a terrible truth: the neighbor was a driveway hoarder.

He started to pile up garbage, boats, engines, tires, and everything else you could imagine in the driveway. Although he was polite enough to keep his junk on his side of the shared driveway, it made my property look incredibly bad, and we had a terrible time trying to rent or sell it. The junk in the neighbor’s driveway reduced the value of my property by 20%, and there was nothing I could do about it. Now I don’t buy properties where the neighbor could so easily affect my bottom line.

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Related: The 5 Most Common Reasons Tenants Leave Your Rentals

In addition to these three, there are other location-specific problems, such as being directly below a flight path or next door to loud/angry dogs. Likely, you’ll have your own list of “won’t touch” property features, and that’s OK. Success is found more often in what you say “no” to than what you say “yes” to. You don’t need to try to fix every deal you find. As the saying goes, “One man’s junk is another man’s treasure.”

What are your personal deal-breakers?

Let me know with a comment!

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

14 Comments

  1. Edward C.

    I’ve experienced the same with properties that have a shared driveway, but have seen it as a source of value providing a higher rental yield vs comps. If I can purchase a property and charge similar rents, but acquire it for less because of a perceived issue/hassle, I’ve personally realized that the relative value can be attractive. The equation is likely to change if it was to be owner-occupied.

  2. tim boehm

    Wow! that really hits home for me, I did a similar thing. Bought in a neighbor hood that was improving, but we had one hold out and he owned three houses, all pig pens. We tried everything, I even offered to buy his three houses at an excellent profit for him but he wouldn’t budge, didn’t even want to hear my offer. He was trash and so were his tenants, didn’t lose money but didn’t make money either.

  3. Kelvin Lee

    Started as a rookie investor, I purchased a property in a C minus neighborhood and had drive-by shooting, murders as such which I didn’t fully realize until the news kept breaking. I was lucky to get out after 1.5 yr of holding realized thing is not going to turn around any time soon.

    I also saw a property located in a prime area which the whole foundation was like a train wreck, though, there was buyer paid $7 million for this deal.

    My primary falls in the shared driveway situation exactly like the article mentioned with the hoarder laying junks along. When reflecting my concern to my realtor, her comment was none of this will harm my property value due to the prime location. People will still pay top dollars to move in and deal with the crap later.

  4. Jerome Kaidor

    An issue has turned up across the street from my apartment complex. A homeless encampment. Tents, couches, tarps, people lounging around. A barrier made of furniture to stop cars from quickly entering that property. The house next door is giving them electricity & water – and from neighborhood scuttlebutt – selling them drugs.

    A crowd of doubtful-looking people hanging out right across the street from my complex! It is making it hard to rent apartments.

    I have informed the police and Code Enforcement. I’m thinking of having my lawyer write a letter to the lot owner.

  5. I currently have a rental property with a shared driveway. My tenant was calling all the time complaining that the neighbor on the shared driveway side would drive around his cars on his side onto my side to go in and out. He was driving very fast and whipping in and out of the driveway. My tenant has a two year old who walks along the back part of the driveway regularly with his mother playing back there in the yard. I needed to make multiple visits and call the police several times but it looks to be solved for now. I would never buy a house with a shared driveway again.

  6. Robert Garcia

    I’m curious what the definition is of a A, B, C, D level property is? Being a newbie and looking for my first investment it sure doesn’t make sense (IMO) to buy in a “A” neighborhood but I don’t want to get involved in a “D” neighborhood either.

  7. John Murray

    I have 1 rental that is a flag with a shared driveway. I turn about $800 per month profit and increased the value from $200K to about $300K. It’s all about location with privacy, In a city situation if can provide both you can turn a profit. Housing shortage in an area is key to success for BRRRR.

  8. Jason Hill

    Easements. Always look at the utility and neighbor easements on your property deed and those around it. The last thing you want is to buy a property and have the power company come through with a high transmission line that borders your property. Out in the sticks where I invest you always have to be aware of so-and-so who may have rights of passage through your property to get to theirs. Learned that through a shared driveway situation too.

  9. John Leavelle

    One of the first properties I “almost” purchased was near a busy Railway line that I was not aware of. Was walking through the property with an inspector during due diligence when a train rumbled by and blasted its horn. Wow! Had to check if I lost any teeth. I told the inspector this was not going to be a deal. He said I don’t blame you. Of course we finished the inspection (I still paid for it). I also do not want properties with drainage ditches behind them. Too many things can happen. Animals, vandals, floods, etc …

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