If you are planning on creating a steady income source by investing in a rental property then you need to make the purchase carefully. Real estate business does not look too difficult from the outside but it is a tough one. The industry has lot of challenges and if you are not prepared then one misstep can completely obliterate the returns.
The first step to becoming a successful member of real industry is to buy the right property. Repairs, tenant search, commercial electrical certificate, etc. are the things that you need to consider later. Here are a few things that you need to pay attention to while searching for the property and you will end up making a profitable investment.
Quality of Neighborhood:
The neighborhood is an important consideration because it influences vacancy rate and types of tenants the rental property attracts. If the neighborhood has a university nearby then most of the potential tenants will be students. You will also have to face regular vacancies in that scenario. If you want to rent a place for office space then it should be an area that is suitable for commercial use. You also need to be aware of the municipal laws so that you do not have to deal with legal issue especially when it comes to turning houses into rentals.
The Property Taxes:
Property taxes are not uniform as they can vary with the type of property and there are other factors involved as well. A landlord is expecting to earn profit from the rental property so they need to know how much they will be losing in taxes. Commercial and high properties will have high tax but if the neighborhood is excellent and there is a high potential for long-term tenants then the high tax will be worth it.
You can get the information about property tax from the authorities as they have all the tax information. You can also get some insight from the other landlords in the area. You should also take the tax hikes into consideration.
Take A Look at Criminal Activity:
People do not like living or working in a neighborhood where they are always in danger of getting mugged. People want to feel safe. You can get accurate statistics about the criminal activity from police or public library or use a heat-mapping tool to create a crime rate heatmap. You should look for vandalism rare, petty crimes and serious crimes as well. You should also inquire about the frequency and effectiveness of police presence in the neighborhood.
Look for Amenities:
You should also check the area for current and future projects. The things that surround the property also add a lot of value to it. If there are parks, movie theaters, public transport hubs, office spaces, etc. all add to the value of the property. The neighborhood with a blend of private and public amenities is best thing that a new landlord can hope of.
The average rent is also a crucial consideration. If the average rent is not covering the taxes, mortgage payments and other expenses of the property then it is not a wise investment. Do thorough research about the potential future of the area so you can estimate a value of the property.