John Goreham has been investing in rental properties for about a decade and owns a rental property company. He has used Mashvisor’s tools in the past to help with his business.
In this article John shares with Mashvisor’s investors why they always walk a rental property before buying it.
Here at Mashvisor, we provide industry-leading online tools for finding, evaluating, and comparing rental property investments. Much of our attention is spent on discussing how to use a heat map when buying a rental property, how to then analyze a rental property, and how to determine cash on cash return and return on investment. However, there are more things to consider when buying a rental property. This is a lesson I have re-learned more than once.
Once you have used online investment tools to their full potential, it’s time to lace up your shoes and hit the road. You need to see an investment property in person in order to gauge if it is right for you when buying a rental property, and if it lives up to its billing on the MLS.
Why You Need to Walk a Property
Online property listings are always going to provide you with the best camera angles and the best views and can make cheap houses look like mansions. When we buy and sell property, this is part of the game, and there is nothing unethical about trying to make cheap homes look fancy. An investment property for sale can cast a spell on us from the warm glow of the computer screen. Before we know it, we are in love with the property without having ever seen it in person.
My experience is that no property is perfect. I have been asked what to look for when buying a rental property. I feel that the most important part of the question is “look.” Go and look at the property and plan to walk the whole property including the surrounding area. You may be surprised by what you find.
Related: How to Conduct Neighborhood Research When Buying Rental Properties
You Need to Know the Lay of the Land, Literally
One of the things to consider when buying a rental property is the lay of the land. By that I mean how the property is situated with regard to elevation and its proximity to water. Nothing is harder to deal with than water problems, and I’ve never seen an MLS listing that starts with “Lovely wet basement and plenty of opportunity for mold.” Water in a basement starts outside.
Check out how the property sits on the land around it. Is it near a river, pond, canal, wetlands, or any other water? That can mean higher insurance costs with an added flood insurance rider. It is also something you can never change. Don’t buy a house in a low-lying area that is flat to the top of a canal or a river.
Conversely, a property atop a gentle hill is a big bonus. There may be views. However, you don’t want the house, condo, or apartment at the top of anything accessed via private way named “Snake Hill Road” if you live in a cold climate. Your snow removal contractor is going to zing you with higher bills. If you can find one to take on the job. Think practically and consider the worse case scenarios when buying a rental property.
Talk, Walk, Listen, and Use All Your Senses
I recently fell in love with a property that had an attractive price in a very good neighborhood. That made me think that I was either in for a great deal or I was missing something. My realtor was no help. She didn’t know the neighborhood well enough to tell me if there was any cause for concern. In the photos, the cul de sac looked picture perfect.
When I arrived and parked, my hopes went up. The neighbors had manicured lawns, the property for sale was in an immaculate condition, and it looked even better in person. The property was north of Boston in a town that has a river running through it. Behind the house was conservation land leading to the riverwalk. Down to the river I went.
One thing the listing failed to mention was that there was an asphalt plant directly across the river from this property. The noise and sounds of the plant were apparent before I could even see it. 18-wheelers bringing in raw materials and huge construction trucks leaving loaded with hot, smelly asphalt. They came and went constantly. Since the access road was a secondary road with a high speed limit, the trucks “jake-braked” as they slowed, and then when they left the plant, they gunned their engines to get up to speed quickly. The quaint suburban neighborhood was louder than a downtown railroad crossing.
Related: The Neighborhood Data Real Estate Investors Need
Advertisements vs. The Real World
The MLS listing for the property I described above made the riverwalk sound like a stroll through the Game of Thrones Riverlands. The images were shot from the perspective of a person with their back to the river. The path looked inviting for jogging or walking and seemed like a big plus.
However, the dense urban jungle across the river had taken its toll. In person, the riverwalk was OK, but the river itself and the shoreline were filled with floating trash. Old tires, plastic bottles, and even a half-submerged shopping cart greeted me when I arrived. This scene spanned the length of the river as far as I could see. Had I not taken the time to drive to the property and then walk the access road, I never would have seen the actual state of affairs.
The mystery of the too good to be true home in the great town was now solved. The property was both too close for comfort to the river, and the river was nothing to brag about. The expected quiet neighborhood instead had trucks coming and going one after the other. It was a pass for me, and I hope the buyer who bought it took the time to go and see what the conditions were. Homes are selling so fast these days it is possible that a buyer can miss the details when buying a rental property.
Related: How to Analyze MLS Listings Using Mashvisor
This true story provides just one example of how walking a property can help you know its actual value as an investment. One last tip I’ve learned is that a pair of binoculars on a site visit comes in very handy. One can see the condition of a roof and a chimney much better with a pair. I also look for any sign that a neighbor has any animals that will be problematic. Roosters and kennels mostly. I also take note of any cars without registration stickers. Those are a sign of neglect.
Be the friendliest person you can be when you walk a neighborhood. Strangers greeted with a smile and warm hello can often turn chatty and tell you a lot about what is happening in the area. Sometimes the news is good. A rehab project about to begin that will improve the neighborhood. You don’t know what you might learn unless you ask. A funny movie had a scene once in which a person was checking out a property. The person considering it asked a passerby, “How often does the train go by?” The answer was “So often you won’t even notice it.”
Knowledge is power. By taking time to use Mashvisor’s tools to find, compare, and analyze properties, you save an enormous amount of time when searching for a rental property investment. Whether you are buying your first property or have quite a few, walking a property under consideration with an eye toward gathering all the information you can is time well spent.
Give yourself more time by trying out Mashvisor’s products. There is no cost to start, and you can begin right away by clicking this link.