Increasing your wealth requires a lot of time and dedication. One of the most popular routes for growing your wealth is through rental property investments. But before purchasing real estate, you need to be well-versed in leasing procedures, mortgage options, property laws, and rental management. In this post, we’ll go over how to select profitable rental properties!
If you are thinking of becoming a landlord, you need to select the right kind property. With various property types on the market, you need to perform plenty of research and seek out counsel from real estate professionals to ensure you select the one that will yield the best returns.
That said, owning the right property is just the first step, you then need to learn the responsibilities that come with being a landlord. Below are some of the duties you need to fulfill as a landlord:
- Screening tenants to find the right match
- Staging the rental unit as part of the marketing process
- Ensuring proper maintenance of the unit throughout tenancies and vacancy periods
- Collecting the monthly rent
- Drafting a leasing agreement
- Conducting regular property inspections
Since some of these tasks can require your full-time attention, it can be tough for investors who have regular jobs. The good news is, property owners can always hire a reliable property manager to oversee their rental property investments.
Factors to Consider Before Buying Your Investment Property:
Now that we know what duties landlords must meet, it is time to evaluate the essential things to look out for before your real estate purchase. Ask yourself the following questions prior to purchasing a property:
Is This the Right Neighborhood?
You must choose the right location since it determines which market you will be serving. You want an area that has a high rental demand to maximize the returns from your investment.
You also need to consider the target demographic. For instance, if you purchase a property near popular local attractions, then you will having an easier time catering to tourists. If you invest in a rentals near a business district, you will be attracting professionals.
What Property Taxes Will You Need To Pay?
Visit a municipality office to review the taxes you will need to pay as a property investor. Calculate if the property tax payments is covered by the estimated income you will be receiving. A high property tax is generally okay as long as the rental demand in your area is high.
Is It Near Schools?
It’s important to choose property locations that are close to schools to build more value. Tenants looking for long-term rentals will want to have access to quality education. It’s also an advantage if you sell your property later on since you can assign a higher selling price for it.
Is the Crime Rate High?
You need to be cautious in picking a rental property. Make sure that it is in a safe location by checking the crime reports through police records. Does the area offer police visibility? Are the crimes committed serious or petty? This is an important factor to check since residents prioritize a sense of safety.
Are There Available Jobs in the Market?
Your tenants will want to live near their workplaces so it’s vital to ascertain if an area offers a robust job market. Go over the job listings to make sure you have a wide pool of renters to attract. Research if big companies are expanding near the neighborhood as this can also indicate more tenant moving to the area.
What Amenities Are Available?
Before deciding on a property investment, you need to assess the neighborhood amenities. Residents will want to be near green spaces, shops, and entertainment centers. Others also value transportation connections and dining options so check out if these features are easily available.
Are There Any Planned Infrastructure?
You need to be updated with area developments to estimate rental demand and property appreciation. Head to the municipal office to gain access to this information.
What is the Average Rental Fee?
Since your investment returns depend on your rental earnings, you need to know the average rental prices charged by local landlords. Make sure that you still earn a profit after paying the interest payments from your mortgage loans, property taxes, and rental operation costs.
How Many Property Listings and Vacancies Are in Your Area?
You’ll want to learn if the property listings are high since this reflects that the rental homes offer short-term tenancy and will rely on peak periods. There may come a time when the market is saturated and landlords have to cut rent prices to compete. This can hurt your profits.
Is the Area Prone to Natural Disasters?
Another critical factor to watch out for is the likelihood of an area experiencing flooding, earthquakes, and other natural disasters that can bring property damage and limit your investment returns. Make sure that you have adequate insurance to cover these natural disasters so you can protect your income earnings.
Tips On Choosing an Investment Property
Here are some additional tips for selecting the right investment property:
- Pick a rental property that prioritizes your rental goals. Single-family homes in residential areas tend to attract long-term renters. Apartments in city centers may yield better results for short-term or vacation rentals.
- Evaluate the appreciation potential of a property. Some real estate can have a higher price tag but still generate high rental rate, thus creating more value for investors.
Every city offers plenty of properties that carry high potential returns. To succeed you need to increase your knowledge of property laws, property management, and mortgage options to maximize your rental income.
Study the factors outlined above before deciding on the property you are planning to invest in. If you’re seeking to partner with a real estate expert, contact Realty Management Associates Inc. today!