anyone serious about their finances can consider investing in property and buying some of the rental properties to boost their portfolio of investments and create a steady income. That being said, taking the plunge and buying your first rental property can be a daunting task. You need to take your financial capabilities and future goals into account. Most importantly, you need to know and understand what constitutes a good rental property.
Real estate is extremely rewarding and lucrative, but it can be a minefield when it comes to extra expenses and can obliterate your returns if you don’t watch your step. It is especially important to tread carefully when you’re buying rental property. While the concept of virtual real estate tours has transformed the industry to a certain extent, it hasn’t reduced the risks that come along with investing in it.
There are certain features that every rental property must have, else it wouldn’t be considered a wise investment. If you are buying a rental property for the first time, then make sure that any problems with the property have been repaired and any concerns have been resolved before you sign the rental contract. Consider the following points before you go ahead and put your hard-earned money into something you might regret later.
The types of tenants you are attracting is depend on location of property. For instance, if you buy near a university, your tenant pool will likely be dominated by students and you will find it difficult to fill vacancies every summer. However, be aware that certain cities aim to prevent rental conversions by charging exorbitant permit fees and adding red tape.
2. Property Taxes
Property taxes are not consistent across the board, and as a homeowner looking to benefit financially from rent, you need to know how much you’ll lose to taxes. High property taxes aren’t always a bad thing, particularly if the neighbourhood is perfect for long-term renters, but the two don’t always go together. Both tax details will be on file at the town’s appraisal office, or you can speak to homeowners in the area.
3. Crime Rate
Another element of an area worth investigating is the crime rate, which involves robbery, arson, vandalism, and other crimes. Do your research on the latest figures for that specific region and its surrounding areas. Of course, you will usually find all the details you need on the internet. Moreover, you can also find out about the police presence and whether the rate of crime is decreasing, increasing, or remaining the same, so you can get a clearer picture of the city and its safety and security.
4. Convenience and Amenities
For those renting a place, it is about more than just physical space. While there are many facilities that tenants seek in a rental home, external amenities should also be taken into account. Landlords do not just sell home for cash; they’re also selling a way of life. Hence, things to do nearby and places to visit will add value to the tenants’ everyday lives.
5. Planned Development
It’s usually a positive sign when you see construction. If an area has been designated for luxury housing, shopping, education, or recreational developments, it can help you attract and maintain good tenants. You can, however rent back agreement, keep an eye out for changes that may have a negative effect on the neighbourhood. Low-income housing, new roads that contribute to noise emissions, and new high-traffic businesses may all have a detrimental effect on an area. These variables would affect the rental rates and the value of a house.
In order to better your research, you can also opt for virtual property tours, which can give you a great head-start when it comes to any neighbourhood/location you choose to buy a rental property in.