Five Questions Every Nashville Landlord Needs To Ask About Their Rental Property?
So I want to start off with a story.
I remember this was many years ago, shoot 2000 and probably 2004 when I bought my first rental properties and had been wholesaling houses for about a year and a half or so and had some success. Of course, it was a really good market back then.
So had been wholesaling some houses and decided to buy a package of houses. These were 10 houses. Decided to buy a package of houses.
And I Can Promise You The Five Things That I’ve Written Down Here That I’m Going To Share With You, I Did Not Ask Them About Any Of The Houses. I Looked At Rent Roll And That’s About It.
Now, luckily when I bought these, I really started to dig in and most of them were occupied.
The seller who I bought them from was… Now I got a great deal.
He was looking to, you know, exit the whole rental game. And so I was able to pick them up for a pretty good price.
However, you know, I knew nothing, I didn’t have any deposits, did have some leases but didn’t have any kind of tenant ledger or anything knowing were they caught up or not caught up.
It Was Really A Very Poor And Ill-advised Way To Buy A Rental Property. (Five Questions Every Nashville Landlord Needs To Ask About Their Rental Property?)
So thankfully, I learned a lot through that experience and thankfully, I was able to get rid of a lot of those relatively quickly and then sold off the rest over time.
Now I’m going to share with you five questions every Nashville landlord needs to ask about the rental property, especially before you buy that rental property.
So The First Thing I’m Going To Tell You, Number One, The Very First Question You Need To Ask Is What Is The Age Of The Home?
Now again, I mentioned this is not something that I did. So the age of the home, I wasn’t necessarily concerned about it.
And it ended up that a lot of those houses, they were extremely old and they were built you know, 50, 60, 70 years prior.
What that means is that you’re going to have more maintenance required for those properties.
It’s Just A Fact. (Five Questions Every Nashville Landlord Needs To Ask About Their Rental Property?)
I mean, some of these houses did not have central heat and air originally when they were built.
And so when you go in and repair that if it’s been added, then it’s going to get more expensive.
Electrical tends to be more expensive.
I had several houses that were knob and tube wiring. So to bring all that up to code costs a lot of money.
And so you can imagine the age of the home most definitely will impact even your return on that investment.
One Thing You Definitely Need To Be Conscious About Is Just The Age Of The Home.
Be very, very careful about that. Just make sure you’re prepared.
I mean, it’s not wrong to buy an older rental house. It’s just you need to understand what you’re getting yourself into.
Probably have all those things inspected. But number one is the age of the rental home.
The Second Thing That I Would Look At If You’re A Nashville Landlord About To Buy Rental Properties, Just The Street Scene. (Five Questions Every Nashville Landlord Needs To Ask About Their Rental Property?)
So stepping back and taking a look at the entire neighborhood.
Now things can change just depending on where you’re buying your rental property in Nashville.
Things can change from block to block or street to street.
And so you just need to look around and figure out what is going on, what’s happening on the street.
Pride Of Ownership!
What I’m always looking for is pride of ownership in the neighbors’ houses.
And I love what pride of ownership means, grass is cut, bushes trimmed, there’s not peeling paint or rotten wood on these houses.
So just step back and look at the street scene and ask yourself, “Would I live on the street if I were renting a house?”
And that will help you kind of get a good gauge, again, not just necessarily looking at the house and looking at the numbers but stepping back and saying, you know, “What is this entire neighborhood like?”
So that’s the second thing I would look at.
The Third Question Every Nashville Landlord Needs To Ask About The Rental Property Is The Market Rental Rate. (Five Questions Every Nashville Landlord Needs To Ask About Their Rental Property?)
Now it does kind of amaze me that a lot of people will buy rental houses and not truly understand the market rental rate for that property.
They may have been told something by someone who’s selling it. I mean that could be a realtor.
It could be somebody who’s flipping the house, wholesaling the house, not really sure, just depends.
And it’s going to be good for you if you make sure you have a really good grasp on that market rental rate because there’s nothing worse for you than to assume and have all your numbers at the house renting for you know, $2,400 a month and you find out it’s really a $1,700 a month house.
Moving Out Of Their Personal Home!
Now for a homeowner who is moving out of their personal home, we totally understand.
They call and ask us all the time, “What should my house rent for?” But they live in the home so it’s not an investment property yet.
But they do want to get a gauge on how much their home would rent for. And just understand that.
Obviously, you can call us, we’ll be happy. Even if you’re just looking at a house.
We do talk with a lot of investors and a lot of them are looking at, “Hey, is this a correct assumption on the market rate?”
So know the market rate, that’s the third thing that you should ask.
The Fourth Thing That Every Nashville Landlord Should Ask About Their Rental House Is, “what About White Elephant Issues?”
Now you might not know what white elephant issues are but let me just go ahead and fill you in.
They are anything that is noticeable and that you cannot do anything with.
Like you can’t ignore it and there’s really nothing you can do about it.
So a white elephant issue might be the houses near train tracks or it’s next to an industrial park or even some things. I mean, think about a steep driveway.
So these types of issues are going to…they’re really irreconcilable defects. You can’t change them.
You Can’t Change Necessarily A Steep Driveway.
You’re not going to change living next to power lines or a railroad track or an industrial or on a very busy road.
And you’re not going to be able to change those.
So look for those things because they will slow down the time it takes to rent that house.
People always ask us, “How soon can you rent my house?” Well, it depends on two things.
The Right Price For The House! (Five Questions Every Nashville Landlord Needs To Ask About Their Rental Property?)
The market rate is if we’re asking the right price for the house per month, and then if the house is in good shape.
So part of being in good shape are white elephant issues, because if there is a problem, and let’s just say it has a very funky layout inside, it’s not a typical layout, it’s very funky, the house is not going to rent as fast.
And so we just kind of let people know that.
So that’s the fourth thing I would ask is, “What about white elephant issues?” If you’re a Nashville landlord.
And Then The Fifth Thing That You Should Ask Is, “what Does The Retail Market Look Like For This House?”
So understand that. Now, in Nashville, we have been in a bull market for quite some time and that’s good.
So in a lot of areas, there’s positive growth.
You’re going to have rental appreciation plus price appreciation, which is great but just really understand where you are in Nashville.
Some Areas Are Going To Be A Better Retail Market Than Others. (Five Questions Every Nashville Landlord Needs To Ask About Their Rental Property?)
And so just understand that and be aware of what your exit options are should you need to sell the house.
Because if you need to eventually sell that house and the retail market just isn’t there, it’s more of a rental market, then it’s going to probably sell at a discount or it’s going to take you much longer.
So consider those things, ask these questions.
What’s the age of the home? What’s the street scene like? And what is the market rate for this house?
Are there any white elephant issues that I need to be aware of? And then just the retail market of the home.
So Those Five Questions Should Really Help You In Your Pursuit Of More Nashville Rental Properties.
Again, this is Spencer Sutton with gkhouses. If you want to talk to us, if you’d like to ask us questions about our services, our property management services, give us a call. (615) 925-3880, extension 3.
We look forward to hearing from you and hope you have a great week.