Questions to Ask When Buying a Rental Property
For a first or second rental house, bought either vacant or with tenants in place. These 20 questions cover what the property has really rented for, taxes and insurance after the sale, the age of the expensive systems, local landlord rules, the cost of getting it rent ready, and what the monthly cash flow actually looks like.
The questions
Open any question for the note
Why are you selling, and how long have you owned it?
Why ask it
An owner selling after two years of landlording usually hit something specific: a tenant, a repair, a tax reassessment, or a rent that never reached the projection. Ask what they would fix if they were keeping it, which is a question sellers answer more honestly than a request for a list of problems.
What has this house actually rented for, and may I see the lease and the rent ledger?
Why ask it
The ledger shows what was collected and when, which is a different figure from the rent on the lease. Look for late payments, partial months, and any period with no deposits at all, because those gaps are the vacancy and delinquency your own model needs to include.
If it is vacant, what are comparable houses nearby renting for right now?
Why ask it
Do not accept an estimate from the seller or the listing agent, both of whom are paid on the sale. Search current listings for the same bedroom count within a mile, call two of them as a prospective renter, and use what is actually available today rather than what closed last summer.
How long does a house like this take to lease here, and which months are slow?
Why ask it
Rental demand in most areas is strongly seasonal, and a house that comes vacant in November can sit far longer than the same house in June. Your vacancy allowance should be built from the local answer, not from a flat percentage borrowed from a book.
What is the current property tax bill, and how will it change after this sale?
Why ask it
In many jurisdictions the sale resets the assessment to your purchase price, and some states also remove an owner occupant exemption once the house becomes a rental. Call the assessor with the parcel number before you offer, because this line has ended more deals than any inspection finding.
What will landlord insurance cost, and is this property in a flood zone?
Why ask it
A landlord policy prices differently from a homeowner policy and the seller's premium does not carry over, especially if the roof or the wiring is aged. Flood determination matters separately, since a lender in a mapped zone will require coverage that can cost more than the taxes.
How old are the roof, furnace, air conditioner and water heater?
Why ask it
These four items make up most of the unplanned spending in a small rental, and they fail on schedule rather than at random. Read the install dates off the equipment labels yourself, then set aside a reserve based on how many years each one has left rather than on a percentage of rent.
What is the sewer line made of, and has it ever been scoped on camera?
Why ask it
A collapsed or root filled lateral is a five figure repair that no visual inspection reveals, and it is the classic surprise on older houses with mature trees in the yard. A camera scope costs a small fraction of the repair, so pay for one during your inspection period.
Has the basement or crawl space ever taken water?
Why ask it
Ask it plainly and then look for the evidence anyway: a sump pump added later, a stained line on the block, fresh paint low on one wall, or a dehumidifier running in a finished basement. Water problems recur in the same spot and they turn into tenant complaints you cannot resolve cheaply.
What repairs have you done in the last three years, and what have you put off?
Why ask it
Invoices tell you what was spent, and the second half of the question sometimes produces the list an inspection would take a day to build. Silence in response to what have you put off is itself informative on a house that is clearly not new.
Who pays which utilities, and what do they run in the coldest and hottest months?
Why ask it
Ask for actual bills from January and July rather than an annual average, because those two months are what a tenant reacts to and what you may end up subsidizing between tenancies. A house with high winter heating cost also rents more slowly if the tenant pays it.
Does the HOA restrict rentals, and does the city require a rental license or registration?
Why ask it
Some associations cap the number of rented homes or impose a minimum ownership period before you may lease, and many cities require registration, a fee and an inspection. Both are enforceable against you regardless of what the seller has been doing.
If there is a rental inspection requirement, what would this house fail on today?
Why ask it
Municipal rental inspections commonly look at egress windows in sleeping rooms, smoke and carbon monoxide alarm placement, handrails, GFCI protection and the condition of stairs and porches. Ask for the checklist from the city and walk the house against it, since these items must be fixed before you can legally collect rent.
What are the local rules on deposits, notices, late fees and evictions, and how long does an eviction take here?
Why ask it
Deposit limits, required disclosures, notice periods and eviction timelines are set locally and vary enormously, and the difference between a six week and a six month eviction changes how much reserve you need. Ask a local property manager or attorney rather than reading a national article.
If tenants are in place, when do the leases end, what deposits are held, and what was agreed verbally?
Why ask it
You inherit the lease exactly as written, including the pet the previous owner allowed without documenting it and the parking spot nobody wrote down. Get the deposits transferred at closing with an accounting, and ask each tenant directly what they were promised.
What is the tenant's payment history, and what would raising the rent to market involve?
Why ask it
A long term tenant paying well under market is a decision waiting for you: raise the rent and risk a turnover, or accept a lower return than the listing implies. Ask when the rent was last raised and how that conversation went, since it predicts how the next one will go.
What would a property manager charge here, and what falls outside that fee?
Why ask it
Get a real quote from two local managers, and ask specifically about leasing commissions, renewal fees, maintenance markups and minimum charges. Self-managing is a choice you may reverse, so the deal should still work with management priced in from the start.
What will it cost to get this house rent ready?
Why ask it
Paint, flooring in the worst rooms, cleaning, appliances, new locks, alarms, and yard work add up quickly, and the money leaves before any rent arrives. Walk the house with a contractor or an experienced manager during your inspection period and get that number in writing.
What does the monthly cash flow look like after taxes, insurance, management, vacancy and repairs?
Why ask it
Rent minus the mortgage payment is not cash flow, and the difference is usually most of the profit. Build the number with the reassessed tax bill, your own insurance quote, a management fee, a vacancy allowance from local leasing times, and a reserve based on the age of the roof and mechanicals.
When I sell this house, who buys it: an owner occupant or another investor?
Why ask it
A house that appeals to owner occupants sells into a much larger market and prices on comparable sales, while an investor buyer prices on the rent it produces. Knowing which one you are holding tells you whether improvements will pay you back on resale or only in rent.
Running the Numbers on a Rental House
Practical guidance for the conversation itself
How to Build the Numbers
Start with a rent you verified yourself
Search current listings for the same bedroom and bathroom count within a mile, then call two of them as a prospective renter and ask what is available and how quickly it is going. Sold comps and last year's leases both overstate the market in a softening one. Use the lower end of what you find, because a rent you cannot achieve makes every other number in the model wrong.
Reassess the taxes and requote the insurance before you offer
Two phone calls, one to the assessor and one to an insurance broker, will get you the two largest fixed costs at the values you will actually pay. Sellers who have owned for years frequently carry a tax bill and a premium that no new buyer can inherit, and both adjustments together can be enough to change your offer materially.
Reserve from system age, not from a percentage
Write down the age of the roof, furnace, air conditioner, water heater and the sewer line material, estimate the remaining life of each and the local replacement cost, then divide to get a monthly figure. This is more honest than a flat percentage of rent, and it tells you whether you are buying a house with a quiet decade ahead or four failures queued in the same year.
Include management even if you plan to self-manage
You may take a job in another city, have a second child, or simply stop wanting to answer the phone at ten on a Sunday. If the deal only works with your unpaid labor in it, you own a job rather than an investment. Price management at a real local quote and see whether the property still stands up.
Verify These With Someone Other Than the Seller
- Achievable rent: current listings and two phone calls to competing rentals, not the listing agent's estimate.
- Property taxes after transfer: the county assessor, with the parcel number in hand.
- Insurance: a written quote from a broker with the roof age, wiring type and claims history.
- Flood zone: the official map for the address, since a lender will require coverage in a mapped zone.
- Rental licensing and inspection: the city or county office that issues them, and their checklist.
- Eviction timeline and deposit rules: a local property manager or a landlord tenant attorney.
- HOA rental restrictions: the recorded governing documents rather than a board member's recollection.
- Sewer lateral condition: a camera scope, which no visual inspection substitutes for.
Red Flags
- A rent figure the seller will not support with a lease and a ledger.
- A pro forma that assumes full occupancy, no repairs, and no management fee.
- Tenants in place whose deposits cannot be documented.
- Fresh paint low on basement walls, a recently added sump pump, or a dehumidifier running during your showing.
- A seller who will not permit interior access to the whole house or contact with the tenants.
- Mature trees over an old clay sewer lateral that has never been scoped.
- A tax bill based on an assessment far below your purchase price in a jurisdiction that reassesses on sale.
- A city rental inspection requirement the current owner has never complied with.