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Before you buy your first rental: a 12-point checklist

· 6 min read

Red brick house with a front porch

Most first-time investors worry about the purchase price. The purchase price is rarely what ruins a rental. It's usually an expense nobody checked, or a rent estimate that turned out to be wishful thinking. Run through this list before you write an offer.

The numbers

  1. Pull real rent comps. Use leased rentals, not asking rents, within about half a mile, with similar bedrooms and condition.
  2. Get an insurance quote early. Landlord policies cost more than homeowner policies, and premiums vary a lot by roof age and location.
  3. Check the property tax after the sale. Your tax bill may reset to the purchase price, so the seller's current bill doesn't tell you much.
  4. Budget for vacancy and capex. Plan on 5% for vacancy and 8–10% for repairs and big-ticket replacements, even if the house looks perfect.
If a rental only works at 100% occupancy with zero repairs, it doesn't work.

The property

  1. Age of the big four: roof, HVAC, water heater and foundation.
  2. Plumbing material. Some older pipe types are hard to insure.
  3. Layout that rents. Tenants pay for bedrooms, bathrooms, laundry and parking more than for finishes.
  4. Durable finishes. LVP flooring and semi-gloss paint save money on every turnover.

The rules

  1. HOA rental restrictions. Some associations cap how many homes can be rented or set minimum lease terms.
  2. City rental registration. Some cities require permits or inspections.
  3. Existing tenants. If the property is occupied, get the lease, the deposit record and an estoppel letter.
  4. Your exit. Would this house sell easily to an owner-occupant if you ever needed out?

Want a second set of eyes on a property? Run it through the rental calculator, or send me the address and I'll pull comps.