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Questions to Ask When Buying Rental Property in Virginia

System - Thursday, March 16, 2017

Should I buy this one or that one?

“Hey Gabe, I’m thinking about buying either 123 Elm St. or 456 Maple Ave. as an investment property, which one should I buy?”. This type of question comes across my desk a few times each month and the answer never changes: “It depends.” If there’s a magic formula out there for evaluating the best real estate deal in every situation, I haven’t found it yet. If you’ve found the magic formula, stop reading this and call me immediately!

There are always so many factors to consider when it comes to investing in real estate, so our role as a property management company is make sure we’re helping set our clients up for success, while not letting them bite off more than they can (or want) to chew. Aside from the obvious questions like purchase price, monthly debt payments, projected rents, and ongoing or deferred maintenance, there are other factors to consider. Here are a few questions to ask yourself when looking at investment purchases: 

  • What are my goals for this investment? Do I need this asset to generate cash now or can I be patient, expecting a smaller short term return, but consistent longer term results? 
  • What’s my exit strategy? If the you know what hits the fan, how can I get out of this and still feed my family? 
  • What are the 5, 10, and 20 year outlooks for this neighborhood? Are new employers coming to town? Are nearby schools improving? Can I learn anything from the last 5-10 years of the area? 
  • How can I add value to this property? Are there physical improvements I need to make right away to generate my target rental income? Are there physical improvements I can make in 5 years, 10 years? 

Don’t be afraid to take your time when evaluating potential investments, especially if you’re just getting into real estate investing. Saying “no” to deals isn’t always the worst thing, so until you’re really comfortable with finding the right property for your needs, it’s OK to be conservative. Gabe Kachuba Feb. 2017