Are you thinking of buying a rental property as an investment opportunity? Research has shown the real estate investments have produced most of the world’s richest people. This shows that real estate is a sound investment when done correctly. Experts advise that, as with any investment, you should be well-versed with the industry before you shell out hundreds of dollars. Here are a few things you need to keep in mind.
What to look for in a residential rental property?
Before you make any rash decisions, there are some questions you should be asking yourself. Do you like the location of the property? You can determine this by looking at online reviews of the neighborhood and online property data. Does it seem like a safe neighborhood to live in? Is crime a concern for you? There are a number of ways to check online: Look at local crime rates, check out crime maps, and look at local crime reports. Does the property have a nearby grocery store, restaurant, or mall? If not, it may not be the best for a permanent or rental residence. Do you want to have an indoor pool?
How much does it cost to buy a home?
Income and expenses aren't the only considerations when looking for a home. In fact, potential buyers should consider whether they will be able to afford a house at all before they even consider purchasing it. If this is your first home purchase, consider renting for a couple of years first and see what you're capable of. If you're planning to spend a high amount of time in the property, look for homes that offer a larger space, or perhaps something that can be split up into more than one property to boost cash flow. This is especially true for families who may want to have more than one house to make additional residential property rental income available.
Figuring out how much rent you can charge
The most important thing to understand before taking on a rental property is how much you can afford to charge per month to the tenants. Many investors will use a financing company to calculate how much money they can earn, and then deduct this amount from their total investment. Some will even use the current local rent for a comparable property as a benchmark. Remember, however, that if your property is of a different size, the financial calculations you make for your landlord can be different. Many investors spend a good amount of time talking to real estate tax specialists too to ensure they know how the property's taxes will affect their income.
Finding a great residential rental property that fits your needs is a daunting task, but the more that you know about the process and what you're looking for, the better your chances of success. Not sure where to start? If you're trying to rent a home, look for one that has a low maintenance factor and has a pet policy. If you're looking for an investment property, be sure to look for ones that have amenities or resources that set them apart from the competition.