Purchasing a Long-Term Rental? Here are 15 Key Things to Look at.

When purchasing a long-term rental property, it's essential to vet several aspects of the property to ensure you're making a wise investment. Here are 15 key things to look into:

1. Structural Integrity

Ensure the foundation, walls, and roof are in good condition. Cracks, sagging floors, or other signs of structural issues could lead to expensive repairs. Look for warning signs of large trees near the home or near the foundation with large root systems. 

2. Plumbing System

Check for old or leaky pipes, water pressure issues, or outdated plumbing. Look for signs of water damage or mold, especially around bathrooms, kitchens, and basements. Specifically polybutylene pipes are not insurable and will need to be replaced. Also, look for old cast iron waste lines because they corrode from the inside out so I recommend replacing those all the way to the street before they become a major problem. Older galvanized supply lines as well. 

3. Electrical System

Verify that the electrical system is up to code and that the wiring can support modern appliances. Check for outdated wiring, insufficient outlets, or exposed wires. Cloth or aluminum wiring must be replaced for insurance. A full rewire is a major expense. To inspect wiring take off the electric panel. Also, some panels will need to be replaced. Federal pacific panels (installed between 1950’s-1980’s), Zinsco/Sylvania, some Challenger will likely need to be replaced. A new panel upgrade is about $1,500 so much less than a full rewire. 

4. HVAC System

Inspect the heating, ventilation, and air conditioning (HVAC) system. Ensure it’s functioning properly, and check the age of the units. Older systems may need replacement soon. Check the duct work. If it’s old metal material it will need to be replaced and this is costly. Look for damages in it. Animals can eat through it and create so many holes it has to be replaced. Does it use R22 freon because that has been phased out so the whole system will need an upgrade. 

5. Roof Condition

Assess the roof’s age and condition. Look for missing shingles, leaks, or signs of wear. A new roof is an expensive investment, so factor this into your costs. Typically a shingle roof that is older than 15 years can become problematic for insurance companies. 

6. Windows and Doors

Check the windows for proper sealing, signs of drafts, or cracked glass. Make sure doors are secure and functional, with weather stripping in place. Old wood frame single glass pane windows are common in older homes and not energy efficient. 

7. Appliances

Make sure the appliances are in working order (stove, refrigerator, dishwasher, washer/dryer, etc.) and assess their age. Older appliances may need to be replaced soon.

8. Insulation

Proper insulation is key for energy efficiency. Inspect the attic, basement, and walls for sufficient insulation to keep heating and cooling costs manageable.

9. Pest Infestations

Look for signs of rodents, termites, or other pests. Even a small pest issue can grow quickly and lead to extensive damage. See duct work above but they will also get wiring. 

10. Drainage and Yard Conditions

Check the grading around the property to ensure proper drainage. Poor drainage can lead to water in the basement or foundation damage. If sloping goes under the home this can cause moisture issues.  Also, assess the landscaping and yard conditions for potential maintenance needs.

11. Exterior Condition

Look at the exterior for cracks in the siding, peeling paint, or other signs of neglect. Cracks allow moisture inside and moisture is the enemy with a home.  A well-maintained exterior will help attract tenants and preserve the value of the property.

12. Code Violations or Legal Issues

Make sure the property complies with local building codes and zoning laws. Check for any existing violations or potential legal issues that could cause trouble down the line. A quick online property and  permit check could save you a lot of trouble and money down the road. 

13. Environmental Hazards

Check for possible environmental hazards such as lead paint, asbestos, radon, or mold. These could present health risks and be expensive to remediate. Many older homes around here used asbestos siding that can get chipped and damaged. They make a concrete hardiboard that matches closely but the removal can be hazardous.

14. Water and Sewer System

Verify that the water supply is reliable, and check the condition of the sewer lines. Older homes may have outdated pipes or septic systems that will require replacement. If on a well, does it have a filtration system? How deep is the well? Shallow wells can produce a lot of sulfur that has an odor and yellow color that stains. 

15. Future Development

Research the area for any potential future developments, like new construction or infrastructure projects, that could affect property values or the rental market. Is the property on a double yellow busy road? Does it back up to a busy loud street? 

Thoroughly vetting these aspects of a property will help ensure that you are not buying into unexpected repair costs or ongoing issues that could impact the profitability of your long-term rental.