Rental Property Investment: A Simple But Essential Checklist
You have decided to invest in real estate for the first time. It’s a very smart idea. When done the right way, it can be a profitable and beneficial decision. However, there are a few factors to be aware of if you aim to be successful with this investment.
There are also several steps you should take into consideration when going down the property investment route. The following are the key things to look out for when selecting a property for development or as an investment.
Initiating your property research
The start of your property search should involve research. You will have to consider a few critical factors when selecting the rental property you wish to buy. Some of the factors you should think about include:
- The type of property.
- The number of bedrooms or size.
- The facilities and amenities in the location.
As you research, you will want to reduce your options down. To help with this, consider your options first. For instance, do you want to handle tenants yourself?
If you do, you might need to live in close proximity to the rental property so you have access to it. Once you have made your decision, you can then solicit the assistance of an estate agent in the area to make the purchasing process easier.
Other crucial factors to consider for property investment
There are a few other pivotal factors to think about when selecting a property for investment. Take a look at the following list of steps to take to help you make your decision.
Deciding where to purchase
You will need to decide on a neighborhood in which to purchase. Do you want to purchase a rental property in a specific area, or would you prefer to widen your search? These factors are important as the types of tenants you rent to will be affected by the location of your rental property.
Should you choose to purchase a rental property in a city center with plenty of businesses you might attract businessmen and women. Think about the location carefully; a bad location will affect the tenants you attract.
Thinking about the property type and amenities
When choosing the type of property to purchase, more than one factor will come into play. To be specific, the property size will attract certain tenants who will need access to particular amenities in the area. This can affect your success.
Selecting a property that is family size, for instance, will attract families with children. With this in mind, you should try to ensure that there are various local schools in the area, which will increase the appeal of your property and the number of tenants you attract.
If you choose a smaller property specifically for students, it is better if the property is located close to the university. You might be interested in a property with laminate, easy-to-clean flooring and equal-sized bedrooms.
As this type of investment is slightly different from an ordinary apartment or house, ensure you’re aware of what you’re getting into, consider the body corporate fees and avoid the debts of any previous owners.
Avoiding locations with a higher crime rate
Regardless of who you rent to, Darren Robertson of Northern Virginia Home Pro says that, “A smart decision when purchasing a property to rent is to steer clear of locations with a high crime rate.
The best way to do this is to carry out some research into the area’s crime statistics. Has crime decreased in the location you are interested in? This will be a major plus when purchasing a rental property.”
Selecting a rental property based on approximate rental prices
Calculations are required when selecting a rental property to purchase. This step is essential as it will ensure you can effortlessly pay your expenses, including the mortgage, and increase your return on investment.
Given that property taxes can increase, this is another factor you’ll need to think about. You are going to need to have sufficient rental income to pay for this, so look ahead several years and make educated estimates for both the average approximate rental prices and the property taxes.
Purchasing a rental property: the take-home points
There are many variables to think about when purchasing a rental property. Keep in mind that you should always:
- Consider the approximate rental prices of the area.
- Think about the neighborhood in which you would like to purchase.
- Sidestep areas in which the crime rate is high.
With these points in mind, you will soon start significantly reaping the benefits of property investment and begin making a profit from your purchase.