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I'm interested in buying a residential property to have as a rental. What do I need to know?

  • May 03 2014 - South Lake Tahoe
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Answers (9)

Are you thinking of buying a vacation home in Lake Tahoe?  Here are a few of the questions and answers I discuss with my buyers to help them make an informed and excellent decision.

1) What time of year do you want to enjoy the property, spring, summer, winter and/or fall?

If you are looking for income to offset some of the cost, summer users should focus their search in a winter lovers' area. Properties in these areas will rent well in the ski season creating income while you're not there. On the South Shore of Lake Tahoe winter loving areas are those near the Heavenly base lodges, so the Ski Run Blvd. area in California and upper Kingsbury in Nevada. The summer lovers' areas are the Tahoe Keys (yoga or cocktails while floating on your paddle board?), Tahoe Island and now Al Tahoe with the great development at Commons Beach.

Note:  South Lake Tahoe is a small place summer and winter ares often overlap. If you choose a home or condo in either neighborhood you are never far from anything, beaches or mountains.

2)How many bedrooms and bathrooms would your ideal property have?

Vacation rental homes tend to rent on the amount of people that the home can sleep. It's all about the numbers! The City of South Lake Tahoe requires a few things from its vacation homeowners. Check out the city website for the specifics:   http://www.cityofslt.us/index.aspx?NID=453   

  • January 23
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Would this be a long term rental or a vacation rental?  Big difference.  If a vacation rental, you want to go to the city web site and get an education regarding the requirements for these.  If you are ok with that then continue on...
  • January 15
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Profile picture for Chris Boyles
You will want to speak with a lender first to make sure you are approved for the loan with your current debt and income.  Once you have that in place, I would find a local Realtor who works with investors to help you find a home that fits your budget in an area that has high rental demand.  You will want to know what they rent for before going to see them and figure out what kind of monthly cash flow they will have to calculate your Return On Investment.  An area with good school districts and close proximity to the city is going to be your best bet to attract the best renters.
  • May 05 2014
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Josh is Correct but in addition to what he mentioned you must also make sure you set aside 10% of each months rent payment for repairs and replacements.   Over time you want to have money in the bank for the new roof and appliances break down so you need to be able to pay for these things at the time without disrupting the cash flow.
  • May 05 2014
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I agree that Joshua offered good advice. I would also have you check with an account as you may find more benefits to your specific situations.
Best of luck,
Kari McCoy, CRS.
  • May 05 2014
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Before I buy a rental I make sure it will have positive cash flow.  First calculate the TMI:  Taxes, Mortgage, and Insurance of the property.  I also add in 1% for depreciation.  Then I do a comparative market analysis of the rent (less 5% vacancy allowance).  If the adjusted rent is more than the TMI of the property I am good.
  • May 05 2014
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Profile picture for joanna323
Thanks for your help! Looking at this long term, and ready to do some research. Thanks for getting me started.
  • May 05 2014
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Profile picture for wetdawgs
"what do I need to know?"   that is a VERY big question.

Can you afford to do this?   Have you talked to a lender about what it takes (e.g. down payment) and whether you can qualify for a mortgage or are you planning to pay all cash?

Do you know rental rates in your area?  Will they cover the mortgage, insurance, taxes, maintenance etc?

Do you want to be a landlord?  You have to be available 24 h per day. Good people skills help.   Or, do you wish to hire a property manager?   Plan on about 10% for that service.

Do you know your state's landlord/tenant laws inside out?  If not, start studying.

Do you have an attorney on speed dial?  If not, establish a relationship before you get your first tenant.

I don't feel like writing a book, but that should give you a clue on some of the things you should start investigating.

  • May 03 2014
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Hello, it depends if you plan to live in the home or just own the property and rent it out.  these types of homes are called investment properties. They are good homes to purchase
  • May 03 2014
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