Five Surprising Green Flags when Purchasing a Rental Property
Investing in real estate is a game of high risk, high reward. Whether you are looking to invest in a single-family home or a multi-family apartment community, there are many moving parts and factors that impact whether any given investment will prove to be profitable. That being said, when it comes to an investment property, things that initially appear to be a problem can actually be a big green flag for investors hoping to score on a diamond in the rough. Properties with noticeable, dramatic problems that are actually easy to resolve are ideal for investment properties. Other potential buyers may be repelled by these problems, but an investor with an air of entrepreneurship can quickly turn these homes into luxurious rental properties. It may be shocking, but here are five perceived problems that make for excellent investment properties:
1. Unpleasant Smells
Unpleasant smells are revolting to the masses. A home with an unpleasant smell is immediately seen as poorly maintained and lower in value. However, as an investor, it’s important to realize that bad smells are one of the easiest problems to fix in a property! The fact that it drives away the majority of competition is a huge bonus. Some common causes of bad smells--all of which are easy to resolve!--include:
- Rotten food in the cupboards or rubbed into the carpet
- Cat or dog urine soaked into the floor
- Smoke residue on the walls, ceiling, and floor
- Mildew on the windows, walls, or other surfaces
2. Outdated Kitchens
The kitchen is the heart of the home. Families spend many hours in the kitchen, and a dingy, old kitchen gives the entire home a dilapidated and lackluster feel. Many potential buyers see an outdated kitchen and cross the home off of their list. What those buyers don’t realize is that an ugly kitchen can quickly be transformed into a modern, beautiful space with a fresh coat of paint, new counters, and a new light fixture.
3. Leaking Roof
You may find this surprising, but a leaking roof is not as big of a problem as it may seem at first! Finding a property that desperately needs a new roof is a gem in the housing market because it drives away the competition for a relatively easy fix. Although it can be a little costly, you can have the current roof removed and a new one completed within a day or two. It’s a quick and painless solution.
Mold is a problem that causes many potential buyers to turn around and never look back! But mold is not a random occurrence; mold only grows when there is moisture. You can easily eliminate the mold if you simply eliminate the moistures. If you walk into a potential rental property and there’s mold growing in a windowless, ventless bathroom, it’s easy to identify why: the moisture from showers has nowhere to go, resulting in mold. Install a vent and the problem is easily resolved.
5. Lack of Curb Appeal
First impressions are important, and a property with an unkempt yard will immediately repel potential buyers. It’s the first thing that buyers see and impacts how they feel about the property from the moment they arrive. Landscaping is another quick and affordable fix, and a basic cleaning, cutting, and edging can transform a property for under $1000. Properties that lack curb appeal often end up with less competition, giving you the opportunity to acquire a cheap property with a lot of potential.