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Buying a Rental Home for Investment


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With much of the country's housing market in a state of uncertainty, many home buyers are looking at not just buying residences, but buying rental homes as well. In many areas, there is an inflated inventory of homes on the market, many of which are likely to be foreclosures or short sales. These inexpensive homes create a unique opportunity for qualified buyers to add an investment property to their portfolio.

If you are in the position of looking for a suitable home to buy as a rental investment, you should take into consideration what would appeal to renters in your area as well as lower maintenance options for you, as the landlord.

Consider, first, the realtor's mantra: location, location, location. Due to the lack of down payment required in renting, it isn’t unusual for a renter to be able to afford a more substantial property, in a more suitable neighborhood, than they could as a buyer.

But don't make the mistake of taking the first great value McMansion that comes along, just because it looks like a bargain. Make sure that you take into account the essential elements that will appeal to renters. A home that is within a walkable distance to schools and shopping will likely be more popular with renters than one that requires driving to get to the closest amenities.

Another thing to consider when you’re looking for an investment property is the crime rate in the area. Rents in high-crime areas are likely to be lower than in areas that have a lower rate of crime and you may find that you’re more likely to avoid problems like vandalism and theft in a low-crime area too.

Don’t be afraid to consider what would benefit your interests as the landlord in a rental home too. While you might be tempted to buy a house that has a swimming pool, hot tub, elaborate landscaping, or other easily-damaged features, remember that someone will have to take care of those elements of the home and tenants might not be interested in the same level of upkeep that you think is required.

For many people across the country, the prospect of home ownership is currently unattainable and so there is an increased demand for rental homes. While these rates will doubtless settle in the future to levels closer to what we’ve seen in the past, the fact remains that until the economy improves and families’ finances recover, there will not be a total recovery in the real estate market.

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