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When buying a house for rental you need to look at it slightly differently than if you were going to live in it. The first thing you should consider is the fact that you will likely someday sell the house and you'll want to make a profit. When selling homes for profit, you make your money by buying at a good price. So make sure you get a house that is at or below the price of similar homes in the area and likely to increase in value. You want a nice house, but wait for one that you can make money from.
Consider the cost of the mortgage plus the cost of maintenance, taxes and management costs. You will need to be able to pay all of those costs and still make a profit. You need to find out what your profit margin is before considering any house. Use a mortgage calculator to find what the monthly cost will be and then add the cost of replacing one or two major appliances or repairs: you can expect at least one major issue a year. Also add in the cost of doing the work for the house. If you don't consider this, you may make a profit but it will be little more than the hourly wages of a property manager. -
You want to buy a house that is close to you so that you can keep an eye on what's happening and so that if you have to go there to fix something or resolve an issue it won't take a lot of time just to get there.
You should also buy a house that you're willing to live in. If financial times become hard you may have to live there or you may decide to rent your house to a family member. This will be hard if the house is far away.
Buying a house you're willing to live in also ensures you have a nice house that people will want to rent. -
You don't want to buy a very large house with a very large lawn unless you're renting out a house in the Hamptons. A larger house with a lot of acreage will raise your property taxes but will not necessarily raise your rent prices to match.
Also, a house with plenty of space will encourage more use, more parties, and more wear and tear on the house. -
As a landlord you open yourself up to possible headaches and lawsuits, so you should choose a house that is safe and not prone to have accidents. You should definitely hire a home inspector. Be on the lookout for the four most serious problems a house might have in terms of safety: radon, lead paint, mold, and asbestos. You should not buy a house that has any of these problems.
Other potential safety issues to be concerned with are steep or otherwise dangerous stairs, badly lit exteriors, cracked sidewalks, and electrical problems. You should also avoid buying a house with a swimming pool; if the house has a pool, have it removed once you buy the home.
