As the housing market continues its gradual recovery, many Americans have gotten creative in their methods for buying properties. All-cash purchases, house flips and short sales have become increasingly common, with both buyers and sellers looking to salvage some measure of value from the recession's rubble.
Another solution many have turned to is the purchase of rental homes. In buying properties at low prices, many Americans are counting on the market's turnaround, hoping their investment will pay off in the form of short-term extra income and appreciation over the long haul. Rather than looking to make a quick sale, which can be tricky and reliant on a certain level of local demand, riding out the market's next cycle is viewed as a less risky approach by many buyers. But in the meantime, if renting an owned property is the plan, there are a number of measures to take so that the eventual appreciation is maximized. Some of the most important include the following:
- An inspection. This is true of any home purchase, but especially when buying a property as a long-term investment with the short-term solution of renting it. Remember, as the owner of the property and the landlord, you'll be responsible for all maintenance and upkeep, so identifying issues upfront through a thorough home inspection will limit the amount of work you're called upon to perform once tenants have moved in. It will also be infinitely easier for you to attract the sort of upstanding residents you seek if you can advertise in good faith your property's sound electrical, insulation and cooling and heating systems. All these kinks are more easily worked out if assessed during the home inspection process.
- Home improvements. Not every project necessarily needs to be tackled at once, but if the inspection uncovers pressing issues - such as those threatening the home's structural integrity or the comfort of your potential tenants - it's probably worth getting out in front of them. Think of it this way: The more needs for renovation or improvement you've assessed and addressed, the more you can ultimately charge for the place from renters. You can justify these charges by honestly promoting the unique, updated features of your home, which will attract the right sort of tenant and promote positive word-of-mouth.
- Finding the right tenants. It should go without saying that successfully renting a home is contingent upon finding responsible inhabitants. But this is especially true when your primary goal is to accrue long-term value, because reckless tenants who might leave cigarette burns on the carpet or set off fireworks too close to the garage only serve to jeopardize that value.