What Makes a Good Rental Home
What makes a good long term rental home? Many real estate clients ask us about investment properties and what to look for. Here at San Carlos Agency, we manage over 350 long term rental properties and we have been managing properties for 60 years. We handle everything from one bedroom condos to 4,000 square foot five bedroom homes. The best rental properties in this area are ones which rent in the $2000-$3500 range. With a lack of local industry attracting high paid displaced CEO’s such as you find in Silicon Valley or San Francisco, it is challenging to rent anything over $5000. People who can afford rents over $5000 tend to own their own local businesses and choose to buy instead. Rents also do not increase linearly with home values in this area, especially in communities like Carmel by the Sea. A two million dollar home in Carmel by the Sea does not bring in twice the rent of a one million dollar home. Another important thing to consider is the other expenses that go with your your home. Property taxes, insurance, gardener and large water bills from extravagant landscaping (especially with the drought), jacuzzi or pool service, condo or HOA dues, expensive utilities from electric baseboard heaters, plumbing susceptible to roots in the line are all things to consider. These are either owner expenses which cut into your bottom line or tenant expenses which affect what people will pay to rent your home. What are some of the qualities people are looking for in general? For families, the school district is very important. For everyone, a clean smelling home (not musty, does not smell like pets) with clean carpets, no pests or bug infestations, working appliances, neutral colored walls, and an open floor plan are essential. If you are renovating a home, It does not have to have top end appliances. For a rental property, you want reliable appliances. Top end generally means more expensive to repair. Talk to an appliance repairman about what he recommends. He knows what breaks and what does not. Built in appliances (like refrigerators) limit replacement options. High quality vinyl flooring is very durable. If you have to replace carpet, get a 15 year or more durable carpet in a tan color. Cheap carpet will need to get replaced in just a few years. As far as location, there are people who want to live within walking distance to the beach, others want to be a few miles inland in the sun and warmth, yet others want to have views from the mountains. No matter where it is, though avoid being on busy streets.
What if you already have a home or just inherited a home in this area and wish to rent it out? Concentrate on repairs which make it clean and reliable: fresh carpet, paint and good appliances.
Owning a rental property has many tax benefits. Tax deductions for repairs and expenses (including management fees) and property depreciation are the biggest ones. Talk to your accountant to see what tax benefits apply to your situation. If you are financing a new property, have them look at the numbers to see if the properties you are considering will make financial sense.
The most important thing for your rental property is who you pick to manage it. When it comes to rental homes and property management in Carmel and the surrounding areas, San Carlos Agency is the best in the business. We have two management options: full management and tenant procurement (where we handle everything through handing the keys to the tenant and then you take over). The choice comes down to how much involvement you want to have with the maintenance and the tenants. Call us and we will look at your property and discuss what we can do for you.
If you are interested in purchasing investment property, consider using a company which knows investment properties. Our sales agents know what places will rent for and what makes a good rental property. Call 831-624-3846 and talk to James, Mark or Julie to get started.