Keep Away From Bigger Homes
The problem with bigger homes is that the more people that occupy the property, the more wear and tear (and potentially damage) to it there is.
For children, who in their play tend to bump, dent, gouge, and even chew up walls, floors, doors, and so forth, this goes double. The old saying of landlords used to be, "I love children, in your place not mine!" However, anti-discrimination laws forbid you from refusing to rent to a family since it has children.
If the home is too small to accommodate a large family you can, though, refuse to rent. Therein lies the reason for not having too many bedrooms.
Although you can't find a hard and fast rule that says how many people, at maximum, can occupy a bedroom (some fire regulations put it at four), it's a cinch that the more bedrooms you have, the more people can quietly occupy the property.
It stands to reason that a house with four to six bedrooms can have more people in it even if both properties have the same square footage than a house with only one. Does that mean that a one-bedroom house makes a good rental? Not usually.
You won't find many tenants (or many buyers, subsequently) that want only one bedroom. But two and three bedroom properties do make good rentals - while four and five-bedroom properties usually do not.
Keep Away From Pool Homes
There are two reasons for keeping you away from pool homes: upkeep and liability. You can't believe how much upkeep is required to be sure it's clean and swimmable until you have a pool.
Let a pool go, and you'll find that algae very quickly destroys the plaster and filters, that equipment deteriorates, and that bringing it back up to par, if possible, can be very costly.
A pool is also a big liability headache. Of course, there's always the chance that someone could fall in and drown. To protect yourself you'll need at least a 5-foot fence with a self closing gate all the way around the pool. In order to maintain the fence and gate, you'll need to rely on your tenants. Finally, when you own a pool home, the insurance to protect yourself can be very costly.
Besides, even if the pool is protected, unless the water is properly filtered and cleaned, there's always the danger that a swimmer could get sick from swimming in it. You can be sure that if this happens and there's a lawsuit, you will as owner/investor be named.
Keep Away From Older Homes
A new house, preferably one less than 25 years old and, ideally, less than 10 years old, will largely avoid problems as listed below. Newer properties have newer plumbing, electrical, roofs, appliances, and systems. There's far less chance of anything expensive going out.
Here's a list of problems that you, and your tenants, are likely to run into in older homes:
Worn-out appliances: For a few years, you might keep them running by tenderly caring for them. Tenants will simply turn them on full and, if they don't work, expect instant replacements.
System problems: From termites in the floor to bad heaters and air conditioning. If you're in the place, you can tolerate it a while, perhaps even do some of the repair or replacement work yourself. If you have a tenant, it will have to be done immediately or you'll lose the tenant - and your rent.
Plumbing distress: From leaking faucets (which you have to run out and fix) to leaking pipes (which require moving the tenant out while the house is plumbed again).
Electrical distress: From light switches and plugs that suddenly burn out to overloaded circuits, which, if not fixed, can threaten, fire. Older homes tend to have wiring that's too lightweight for today's modern appliances.
Tenants can easily overload it by plugging too many heaters, lights, washers, or other appliances into the same circuit, blowing fuses and circuit breakers. This can necessitate expensive rewiring.
Roof leaks: You might put up with a bucket for a while, but a tenant will want it fixed instantly.
Keep Away From Big Lots
If you're the sort of person who likes room to roam, buy yourself a house with a big lot to live in. But, if you're an investor, avoid them like the plague. A big lot requires big maintenance.
If it's got lots of lawn and landscaping, you'll need to hire (and pay for) a gardener to look after it. You can't count on the tenants to do that; after all, it's not their yard.
The bigger the lot, the more upkeep is involved. Yet, when it comes time to resell, you'll find that a big lot will only marginally return you any more money. In some markets, it may in fact get a reduced price!
Be Ware of Condos and Co-Ops
Many people do successfully rent condos for years. However, you have to be careful with a condo and especially careful with a co-op. The reason is the HOA (home owner's association) or the Board (of Directors).
You see, all condos are part of a HOA, including any you'll buy. And the HOA will set the rules for everything from changes you can make to the exterior to noise in the evening to where cars can be parked.
Boards set similar rules for co-ops. In other words, there are lots of rules. Hence, when renting a condo or co-op expect all sorts of initial problems during the rent-up period.
Further, expect continuing problems with the HOA or Board. Although owners tend to follow the rules, if reluctantly, because they realize rules are there to keep up the overall value of the property, tenants have fewer constraints.
Tenants could care less about property values, since they don't own the property. Expect your neighbor owners to complain at the drop of a hat about your tenants' activities.
And expect to be fined and chastised by the HOA or Board over what your tenants do. There's often a lot of hassle that you'll have to put up with. Of course it can be well worth it in the end if you get rapid price appreciation and can refinance, cash out, or sell for a big profit.
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