Buying an investment property to rent in Columbus is an excellent idea. Data suggests that almost half the population in the city lives in rented homes. This number is expected to increase in the following years. It is therefore unlikely that you will find a house in mint condition. So, before purchasing residential investment properties, you must thoroughly inspect it, and calculate the cost of preparing it for the rental market.
Here are a few things you must consider-
Cleaning the space inside-out
While cleaning the acquired house from the inside is essential, you must also pay attention to the exterior. Bushes often grow in areas where water is readily available such as around dripping pipes. These bushes can block the flow of water and even attract insects and rodents.
Trees that grow close to the roof or windows can also cause potential structural damage to the property. You must get rid of those bushes and chop down the extra parts of the tree that may cause interference.
Durability of Large Capital Improvements
One must realize that all large capital improvements and mechanicals in the house have a certain life expectancy. Regardless of how well you have been maintaining them, you have to replace them someday. When purchasing a property, make sure you ask the seller how long it has been since the installment of the items.
For instance, a water storage tank lasts between 8 to 12 years. A furnace and a rooftop are generally expected to endure around 15 to 20 years. With this kind of awareness, you will know what to expect, and where to invest.
The condition of the roof, exterior, windows, and driveway are some other things you must consider. These large capital expenditures must be considered at the time of purchase and throughout your ownership of the property.
Are the damaged items repairable?
You may consider repairing the items, rather than replacing them, if possible. Repairs are cost-effective since they are a fraction of the cost of replacement. Usually, the cost of repairs is around 10% of the annual rent. However, sometimes they might be more expensive than anticipated.
Replace- if the need be
If you find yourself in a situation where some of the items are about to expire in a few years, it is advisable to replace them. Once the property is occupied by the tenant, it will be difficult to make these changes. Some changes may also require the tenant to vacate the property for a few days. This will not only cause inconvenience but will also result in the loss of rent.
The 1% rule for buying an investment property to rent
The 1% rule says that you should buy a property that gives you rent that is 1% of its total cost.
In simple words, when you visit a neighborhood, inquire about the rent the other properties generate. If the rent is $1,000 per month, you should try not to pay more than $100,000 for the property for better returns on your investment. Additionally, these are other expenses that you may consider in your budget while buying an investment property to rent in Columbus.
- Insurance rate
- Property tax
- Pest control services
- Cost of renovation and modification
- Potential period of vacancy
The process of buying an investment property to rent out can be challenging as it requires knowledge of the nuances of the business. In case of difficulties, you can always contact your Columbus property manager for assistance. A property manager can bring years of insight and share their personal experiences.
Solutions for Real Estate can be your trusted real estate and property management partner. In business since 2001, S4RE has been a leading independent brokerage in central Ohio for residential, commercial and property management. Connect with us to discuss your real estate needs.