About to Buy a Rental Property? Let These Eight Tips Guide You
Are you looking to invest in a rental property? Have you inspected the property online and its surroundings to make sure that your investment doesn’t turn into a huge loss? How do you decide that the property is worth acquiring?
Buying a rental property or taking out a mortgage on one can turn out to be the worst decision you have ever made in your life. The best way to go about this is by using a property agent, who understands the property market and can give you recommendations on what will be profitable and what won’t.
Here are some features that can significantly affect how profitable it will be.
Is the property fairly in order or does it need a massive revamp to return it to shape? Does it require a few plumbing renovations or does the whole drainage system need to be overhauled? Will patching the roof fix the leaking problem or will you have to re-roof?
While a decaying property might be favourable in terms of the price and in the sense that bringing it back to shape can improve its value, you need to consider whether the property, when you add the repairs needed, is affordable for you. You don’t want to live on a building site for the next 24 months while you cobble together cash to complete work.
When planning on buying a rental property, you have obviously worked out the type of tenants you want to admit. Perhaps you discovered that you will make more profit and have peace of mind if your tenants are long-term professional renters.
Settling for the wrong neighbourhood will only ruin your plans. If there is a university around the property, then it is possible that students are the potential tenants you would be getting, and you may have to contend with void periods during summer breaks.
If you are interested in long-term tenants, then it’s possible that they will have children. Assuming you found a suitable property and there are schools close by, you ought to go out there and investigate whether the schools are of decent quality and will be ideal for the type of tenants you want.
If the neighbourhood in which the rental property you want to invest in is prone to criminal activities, then it may be wise to avoid such a property. It won’t only be difficult to rent or sell later, but will also expose your property to potential damages do to vandalism.
Before buying, visit the nearest public library or police station to acquire the crime statistics of the area.
Don’t only check the map of the neighbourhood. Also move around the area. Inspect the various public amenities that are available in the area. Hospitals, malls, gyms, parks, an accessible transport system, a public library et cetera. These are all good signs that speak to the worth of the property and how easy or difficult renting it out can be.
If the location of the property is full of employment opportunities and the price is reasonable, by all means snatch the property. Job opportunities rank among the top factors that pull prospective tenants into an area.
An area liable to natural disasters like flooding or earthquakes will only repel prospective tenants. Plus, such an area will mean you will have to take out extra insurance also—the expenses can make a big dent on your rental income.
If rental income is the monthly reward for your purchase of the property, then you have to put that in mind before you buy. Check the area and verify the average rent. Then weigh that with the price of the property or the mortgage payment, and also consider the taxes and other expenses you will make on the property. If the result is favourable, then buy.
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