Investment properties are often an exciting venture to dip one's toes in as they can be very rewarding if the right choices are made. Most people look for residential rental properties to boost their investments but, keeping income and benefits aside, real estate is a tricky domain.
There are a few questions that run through the mind of a first-time landlord like, how to recognize a good rental property, how to steer clear from a bad rental property, the neighborhood, property rates, etc. It is important to be well-versed with the pros and cons of the real-estate world.
Here are five things to consider before investing in a rental property:
Choosing a property: Before beginning to go deep into the investment world, one must know the kind of property one wants to buy. For beginners, the best kind of investment property is a single-family dwelling. These kinds of properties attract long-term tenants.
Neighborhood: The kind of place you invest in also accounts for the kind of tenants you will attract to your property. Make sure that the following few things are met in the neighborhood before investing in a property:
4. Future Developments: It is imperative to know the kind of developments that will take place around the property you wish to buy. The local planning department will have information regarding the projects that are already undertaken for the area. It is always good to buy property in a developing area as this affects rent price, property tax, tenants, etc.
5. Natural Disasters: If an area is prone to natural disasters like earthquakes or flooding, insurance costs can eat/burn away your rental income. Insurance is also another thing you will need to subtract from your returns so you will need to know how much it is going to cost you.