There are a lot of things to consider in buying a rental property, from deciding to invest in real estate, to actually making the purchase. This work can be pretty intimidating for first time investors. A real estate agent might be able to assist you complete the sale of a rental property, but its always a good thing to do extensive research on the investment on your own. The important thing is you have to make an objective view in the properties you are considering investing.
Here are the factors to consider in looking for an ideal rental property:
1.) Location – the area where your rental property will be is going to be a deciding factor in choosing the kind of tenant you’re going to have. For example if the property is near a university, there is a big possibility you’re going to have students as your tenants and there might be vacancies on a seasonal basis when these students go back home. You also have to decide if you are going to seriously manage the property or get a property management company to manage it. If you’re going to manage it then getting a property far from where you are will be an issue.
2.) Property Taxes – as an investor that is going to profit from renting, there might be different tax policies that should be taken into consideration. For example if you own a property in that particular state and if you buy a second property in the same state, property taxes might go up somehow, especially if its going to be a rental property. The best thing to do is familiarize yourself with property taxes in your area.
3.) Crime Rate – safety is one factor that should not be ignored. Future tenants will be checking on the area if its going to be a safe and secure neighborhood to live in. Don’t ask the homeowner or the seller about it instead go ask the police for the crime statistics of that neighborhood. Things to be aware of are serious and petty crimes, vandalism rates.
4.) Check the condition of the rental property – its not a bad idea to buy a property that is not in a good condition, it will give you a chance to advance the value of the property by renovating it. But renovations can be costly, it will be coming out from your own pockets, so you have to make sure you have enough funds to cover these costs. A shabby property might not be a good way to attract tenants.
Searching for the ideal rental property is just the first step for you as a real estate investor and for this, you will be doing a lot of research from homeowners to renters in the neighborhood, taxes and a whole lot more. Investing in rental properties can give you great returns if you do things the right way from the start.