Consider these precautionary points before searching for investment property
Any rental property needs to attract top-notch tenants in order to maximize the
strongest rental income and dividends. So when locating properties to bid on, be sure to look for rentals that are attractive to tenants, even if they are not so attractive to you. Also, make sure you find properties that offer tenants the strongest benefits. For example, buy properties close to public transportation, shopping, and highways, since they’re all features that are positive for most tenants – even if they may not be crucial for your needs.
Be sure to look for properties in areas that are forecast to be, or are already becoming more desirable. In addition, always be on the lookout for rental properties that you should avoid: ones where the amount of repair costs needed to attract excellent tenants are prohibitively high. Also, be wary of rental properties in areas that are geographically poor for most tenants (for example, a high crime area), thus leading to the scourge of high vacancy rates.
Some of the best investment property advice can be summed up in these key points:
Buy closer to high-density areas
A greater population density will have a positive effect on rental yields and valuation. Look to cities when beginning an investment program. You can augment them with suburban properties in high-density areas as well.
Place quality areas before the absolute price
Buying a cheaper property in a sub-prime location may seem like a better way to go, but it will exhibit slower growth in value over the long run relative to a higher-priced property in a better area.
Always use a house inspector prior to purchase
This can’t be emphasized enough. You’ll need to discover everything that’s wrong with the property prior to signing a contract, so you can adequately budget for improvements, with no hidden defects lurking.
Go a little outside your geographical comfort zone
By expanding your reach in areas, you can adequately diversify your property holdings. This will help in the long run, as some areas will appreciate at higher rates than others.
Consider multi-family houses and condos as a lower-cost way of entering the investment process
Multi-family houses can ultimately be less expensive than single family properties, since the cost per unit is much less than single families. Also, the cost of the unit relative to the land cost is much greater. And since land is not tax deductible, you’ll be maximizing your tax deductible part of the property. If you’re on a tighter budget, consider condos as a great entree into property investing. Condos as a whole are much less expensive to acquire than single family houses.
Buy in areas where rentals are most in demand
Make sure you research the areas you’re thinking of buying in before you start bidding on properties. Check with local Realtors for rental and vacancy rates. You can also check these rates using websites such as FinestExpert.com. In addition, check with local police departments to investigate the crime rates in the area. Think just as a tenant would when they’re looking for a rental. Naturally, they will ultimately be your customers.
When possible, buy newer properties
By purchasing recently built houses, you’ll have much less headaches. This is simply because they will ultimately save you in the long run on repair costs, compared with older properties.
photos courtesy of clearviewlistings.com, tenantscreeningblog.com, made-in-england.org, beaconlighthomeinspections.com, michaelhomesinc.ca, whatsupjacksonville.com
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