Do you plan to invest in real estate by purchasing residential rental properties? It sounds exciting and rewarding, but investment properties entail responsibilities to ensure a good profit and income. For first-time investors, it can be daunting; however, if you do proper research and be hands-on with the business, you will be satisfied with the results.
There are pros and cons of real estate investing, but here are the most important things to consider when looking for good rental properties.
Research can be done online, conducting an actual survey of the property, and asking advice from a trusted real estate professional. By research, you can narrow down several key characteristics you want for your rental property—such as type, location, amenities, and size. Once you’re done with that, you can ask a professional real estate agent to assist you with purchasing the property.
TOP 10 FEATURES TO CONSIDER
Here are the top 10 things you should consider when searching for the right rental property.
In every purchase, including buying a property, the very first thing you should check is your capacity to pay. Investing in a property is not a small purchase but huge spending. Know how much you can afford.
You can check the bank and know how much of a mortgage you can take out. But you can simply estimate how much money you can spare every month for the rental expenses and figure out how much money is leftover from month to month.
This pertains to your location. Determine the types of tenants you want to attract and your vacancy rate. If the rental property is located near a university, you will have a bigger chance of having student tenants, which means there will have vacancies in your rental space during their school break.
If your rental property is a family home, note that parents’ priority is their children’s safety and wellbeing. They would also want a location that is
accessible to schools, markets, and shopping centers, parks, restaurants, and entertainment venues. Choose a home in a good area so that parents and families will be happy and stay longer in your rental space.
- Property Taxes
Property taxes differ widely across your target area. High property taxes are seemingly bad, but you can still save your tax expenses in a great neighborhood that attracts long-term tenants. Moreover, ensure that you will get an excellent investment property out of high taxes.
There is tax information on file at the municipality’s assessment office. You can also talk to homeowners in the community. Be sure to find out if property tax increases are probable soon.
- Average Rental Price
Research and know the average rental price in the location of your rental space. In that way, you can quickly calculate how you’ll pay for the monthly mortgage after the payments from your tenant come in.
Rental income will be your bread-and-butter, so make sure that the rental property can bear enough rent to cover your expenses-mortgage payment, taxes, etc. If your area is currently affordable, but taxes are expected to increase soon, a reasonable property today could mean bankruptcy later.
- Crime and Natural Disasters
Everyone wants a safer home and community, especially families with younger kids. Before buying a rental property:
- See the local police office or public library regarding the accurate crime statistics of the area where the property is located.
- Check vandalism rates and for both serious and petty crimes and note if criminal activity is on the rise or declining.
- Check how responsive is the police presence during criminal incidence.
Besides knowing the crime rates, secure that your location is also safe from natural calamities like flooding and earthquakes. If the area isn’t safe, then the insurance coverage costs can eat away at your rental income.
- Job Market
If the property’s location is soon to have a huge commercial and business establishment, home rental property is needed. There will be employment opportunities, and people will surely flock, thus will also attract more tenants to your rental space. Take advantage if there is an announcement about a major company moving to the area. This may cause housing prices to go up or down, depending on the type of business involved. You can assume that your renters will benefit if you would like that company in your backyard.