One of our clients recently decided to sell a property, and that prompted today’s topic, which is a guide to rental real estate investing. When you’re looking at individual properties, there are several things to consider before you make a purchase.

Study Investment Property Locations

Take some time looking at the areas where you want to invest. If you’re planning to manage the property yourself, you’ll need to choose something that’s close to you. You’ll want to be able to get to your property within an hour or an hour and a half. If you know you will rely on a professional property manager in Modesto, Patterson, or the surrounding Stanislaus county area, then that expands your geographical area. You can look at opportunities outside of your immediate location.

Understand the Property’s Condition

When you’re investing in rental property, it’s important to look at the exterior as well as the interior of the home. You have to do your due diligence to make sure everything is sound and functional. Inspect the electrical and plumbing systems. Look at the mechanical features and the fixtures. Once you make the investment, you own any problems that come with the house, and that will be your expense as you prepare it for the rental market.

Conduct a Rental Income Study

A Modesto or Patterson area property manager can help you determine how much rent you’ll earn before you buy a property. Get an estoppel from each tenant because the amount your real estate agent tells you that you’ll earn might not be the actual rental income. The property may have vacant units that are not bringing in income. Any income or lack of income will impact the return on your investment.

Conduct an Expense Study

In addition to an income study, you’ll want to do an expense study. Find out what the current owner pays for. That will include things like taxes, insurance, water, sewer, trash, maintenance, and other expenses. All these things will affect your bottom line.

Look at Portfolio Maintenance

You need to know how maintenance has been taken care of before you buy, for example, a Modesto investment property. Look for records of Adrian Harrell - Senior Property Manager photorepairs and maintenance schedules. Any deferred maintenance will be your expense down the line. If you’re considering a building with siding, get a pest study done so you know the structure is sound.

These are just some of the things to consider before making an investment. If you do these things, you can expect to get the best return. Please contact us at New Bridge Management if you have any questions.