When you set out looking for a rental property, you probably have a good idea what you’re looking for. Let’s say that you’ve decided to target families, hoping for a long-term rental/low turnover. You’ll narrow down your search by looking for an area with good schools and parks (location! location! location!). You’ll look for houses with at least 3 bedrooms and two bathrooms, and a good-sized yard. You’re savvy enough to realize that you can change out the ugly old carpet and paint the walls, so those things won’t matter in your search. Finally, you have a idea of sales prices and mortgages vs. expected rental income.
As you narrow down your search and choose a property, don’t forget that you’re also buying the neighborhood!
This is similar to the all-important location-location-location, but is more specific. You know how some neighborhoods just don’t feel right? It could be something obvious — the house is on a street that backs onto a major road, or there’s a power plant at the end of the street. But it could be more subtle.
I live in the middle of a large planned development, entirely targeted at families. It’s full of single-family homes in a superb school district. Knowing the area so well, I have all but one of my properties here. But there’s one subdivision nearby that neither my realtor nor I bother to look for properties in. On paper, it’s just like all the other neighborhoods. Same homes, schools, families. But it’s never felt right to us. We have noticed that there aren’t any parks or open spaces, but that’s the only tangible difference that we can point to. The truth is that it just doesn’t feel right. It’s not welcoming. It’s not the place to make a home. And if we (busy looking at statistics and paperwork) notice this, a potential rental surely will, too. There are other houses for sale, so why would I buy one there?
Buying the neighborhood isn’t a once-and-done thing though! If you start having trouble renting your property, and the problem isn’t the property itself, take a look at the neighborhood. If it’s had lots of turnover, or now is full of rental properties with managers not as caring as you, the previously charming neighborhood may have lost its shine. Or perhaps the surrounding area is changing. I had one property that backed into a large green space. But that area was being developed, and new office buildings were heading right towards my property. The view from the backyard was about to change for the worse. I felt that it was smart to sell, rather than waiting a year or two for the actual construction to start.
So, even if your general location and property are sound, it may be time to sell your property and trade up for another. Have a look around and see if things have changed. Your property could still look good on paper, but no longer appeal to renters.