We spend a lot of time talking to investors about what they should look for when they’re investing in Long Beach real estate. But, what should you avoid?
This question is just as important. New investors are especially susceptible to acting quickly and making offers on investment properties that might not be right for their goals or finances. Even experienced investors can get excited about an opportunity without really digging into whether it will be attractive to tenants or bring in the desired rents.
Identifying the red flags in a potential investment property will help you focus your energy and your resources in better and more profitable places.
Here’s what to look out for when you’re investing in Long Beach rental real estate. These are the properties you don’t want to buy.
Fixer Uppers Never Work Out the Way You Expect
If you have a specific investment strategy that focuses on buying, improving, and selling properties, a fixer-upper makes sense. But, if your strategy is to buy a property, rent it out quickly to good tenants, and hold it for the long term, you want something that needs less work and little renovation.
It may be tempting to buy a run-down property for cheap. You can probably see the potential in that home, and you’re likely excited about the low price tag.
But, our experience has demonstrated that you’re going to spend a lot more money than you budget for. It’s going to take a lot more time, too.
Which means that you won’t be earning rent for at least a couple of months. The investment will be hard to recoup. Instead, look for well-maintained investment homes that simply need cosmetic updates and upgrades. You’ll save money, earn more money faster, and get right to work on finding and placing a great tenant.
Avoid Undesirable Long Beach Rental Property Locations
There’s no sense in buying a property in a heavily commercial or industrial district. If a freeway cuts through the backyard, think twice before you make an offer. Properties in a neighborhood where a lot of other homes are boarded up or vacant will not be attractive to great tenants.
Location is important to tenants. They are looking for homes in established neighborhoods, where there are good schools and shops, restaurants, grocery stores, and entertainment can be easily accessed. Tenants want to be able to get to work easily. They want options for recreation and relaxation.
If a property is too remote, it will take you longer to rent it. If it’s not in a desirable neighborhood, you won’t be able to charge the best rents.
Make location a priority before you invest. There are a lot of things you can change about a property. You can improve its condition and add new amenities. There’s not much you can do about the location, however, so be strategic when you decide what to buy.
Properties with Bad Tenants in Place
It seems like a great idea to buy a rental property that already has a tenant in it. You don’t have to worry about marketing, screening, or vacancy, right?
Yes, if it’s a great tenant. But what if it’s a tenant who isn’t paying rent on time? What if there’s a history of lease violations and conflict?
Don’t invest in a property that’s occupied by bad tenants. It’s not a problem you need to inherit.
Now that you know what you should avoid, we’d love to discuss your Long Beach real estate investment goals and help you identify some opportunities that might work well for you. Please contact us at HCM Property Management.