Buying a rental property in Burbank, CA, can be a great investment. But, it’s crucial to ask the right questions before taking the plunge. This is a significant investment and doing all your research and number-crunching beforehand will pay off big in the long run.
Before you sign the dotted line and take on the role of landlord, here are some key questions to ask when buying rental property in Burbank, CA.
The Location of Condition of the Rental Property
Of course, the location and condition of the property are paramount. This will ultimately play the biggest role in determining your overall success as a rental property owner. Choosing a great location and a well-constructed house are the foundations of any successful rental property purchase.
- Condition: Ask for detailed inspection reports and maintenance history. Are there any major repairs needed?
- Age and construction: What materials were used? Are there any known issues with this type of construction?
- Neighborhood: What’s the vacancy rate like? Are there any businesses or developments nearby that might impact the property’s value or tenant desirability?
- Zoning and restrictions: Are there any limitations on rentals in the area? Can tenants have pets?
- Crime rates: Is the neighborhood safe?
- Amenities: Are there schools, parks, or public transportation nearby?
The Finances of the Rental Property
A very close second to location and condition are the finances of the rental property. This is a business after all, and income and expenses must be calculated and tracked the entire time you own the property.
Asking the right questions about a rental property’s financial status will go a long way toward long-term profitability.
- Purchase price and closing costs: Is the price fair for the property’s condition and location? What are the estimated closing costs?
- Rent potential: What is the average rent for similar properties in the area? Is it enough to cover your mortgage, taxes, insurance, and maintenance costs?
- Vacancy rate: How often do similar properties sit vacant? Can you afford to pay the bills during vacancies?
- Potential for appreciation: Is the property in an area with a strong potential for future value growth?
- Tax implications: What are the tax benefits and drawbacks of owning rental property?
When the Rental Property Already Has Tenants
Buying a rental property means dealing with tenants. This adds an element that goes beyond facts and figures. These are people with emotions and different life circumstances. Plus, you never know the relationship they had with the previous owner.
That’s why it’s important to ask questions about the current tenants and any difficulties with past tenants. Notably, you’ll want to know the tenant screening process and if every tenant has already undergone one.
- Screening process: What is the seller’s current tenant screening process? Is it thorough and effective?
- Lease terms and renewal rates: What are the typical lease terms for the property? How often are tenants renewed?
- Eviction history: Have there been any evictions in the property’s recent history? If so, what were the reasons?
- Property management resources: Are there reputable property management companies in the area? Would you consider hiring one?
Other Questions to Ask When Buying Rental Property
Another question you should ask is why are they selling the property. Are they just ready to sell and take their profit from appreciation? Has it been a headache for them? Are they accidental landlords looking to get out of being a landlord?
You should also be aware of extra insurance you might need to carry and the status of the warranties on appliances and any repair work done to the property.
Asking the Right Questions Pays Off
Remember, it’s important to get answers from multiple sources, including the seller, real estate agent, property inspector, and possibly a financial advisor. Don’t hesitate to negotiate on the price or terms based on your findings.
By asking the right questions and doing your due diligence, you can increase your chances of making a successful investment in a rental property.
Property Management Company in Burbank, CA
If you’re considering acquiring a rental property in the Burbank area, the first people you should talk to are the property management professionals at Lotus Property Services. We have vast experience in the local rental market and can offer insights and advice you won’t find anywhere else.
We love to talk about real estate investments. Contact us today to learn more about Burbank property management and asking the right questions when buying a rental property.