Factors to Consider Before Buying a Rental Property
The moment you decide to buy a rental property, plenty of work has to be done. Real estate is a fascinating industry. The task of buying and giving properties on rent can be daunting. In fact, the process of owning a property is real, tough business. If you are shopping for a rental property, there are few things you must keep in mind. In this short article, you will read about these factors.
You may consider property hunt as a DIY! But, you need professional help. Property management companies and real estate agents can help you with the search. With a skilled property manager by your side, you can avoid unnecessary pressures. The realtor will find properties that suit your needs. They follow an unbiased approach while hunting for properties. If you are a landlord with strict budgets, the property management company will stick to a predefined investment range.
Factor #1 – Neighborhood
The value of rental properties is defined by the neighborhood. Quality neighborhoods can increase the overall value of your property. In fact, it attracts more investors and tenants. If you buy a rental property near a college or university, students will be your primary tenants. Next, you can focus on professors and administrative staff. Students, professors, and administrative professionals are likely to pay rent on time!
Factor #2 – Property Tax
The talk about properties would remain incomplete without property taxes. This is a standard in all states. If you are planning to use money from the rent, you must verify how much is required to pay the taxes. When the neighborhood attracts long-term tenants, there is no harm in paying hefty taxes. To gain more information on property taxes, you must visit the local Assessment Office. At the Assessment Office, you will be able to grab files on tax information. Once again, the property management company will help you find the tax information file.
Factor #3 – Education
Most rental properties near schools are of great value. If you have little ones, you must ensure if there is a good school in the neighborhood. Before you sign on those dotted lines verify if the school is of good quality. The school must have a promising reputation. Remember, the school’s overall reputation will have an impact on your property’s price. Most landlords are concerned about their monthly rental income. They forget that the actual value depends on the rental property! In fact, schools can increase the amount of money you make, when you sell a property too!
Factor #4 – Safety
Have you ever wondered how criminal activities can affect the worth of your property? Tenants don’t look for properties in criminal hotspots. Most people prefer staying in safe and composed locations. When you buy a rental property, make sure the local crime rates are low. Visit the public library or local police office and inquire about the neighborhood’s crime statistics. You must look for petty crimes, vandalism figures, and percentage of serious criminal activities. You should gather information on how often police officers visit the neighborhood too.
Factor #5 – Employment Rates
Tenants are always looking for a promising and a fortunate neighborhood. They focus on destinations with an active job market. Locations that offer better employment opportunities can attract more tenants than the rest. The U.S. Bureau of Labor Statistics gives a comprehensive insight on “localities and its job market”. If a company is moving into the neighborhood, you can market it as a budding spot for real estate investments. Of course, you must be clear with the corporation too. Check if you want the corporation to be established in your backyard. Will renters be happy about this?
Factor #6 – Amenities
Rental properties must be loaded and surrounded by amenities. These are factors that can help in increasing rents. Amenities can be anything like movie theatres, malls, parks, public transportation hubs, and gyms. These perks attract tenants. Property management companies advertise properties with amenities as a promotional element.
Factor #7 – Rent
The bread and butter of your property will be the rental income. On an average, all rental properties in a specific region generate similar rents. When you charge a fixed amount of rent, you should be aware of the local average. Also, check if the rent would satisfy your requirements (taxes, mortgage repayments, and other expenditures). The locality must be researched carefully. You must understand the region’s chances for growth in the next five or ten years. If you expect the prices of properties to increase in the next few years, you may consider investing. But, the property taxes and maintenance charges are likely to increase too. You must be able to handle these charges, without suffering bankruptcy.
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