Some people become landlords almost by accident when they decide to keep and rent out a former residence rather than sell it-either because they can’t sell it for a desirable price or because it just makes sense as an investment. Others are part-time landlords of a vacation property, which they rent to vacationers and also use personally. Still, other people are enthusiastic, deliberate investors in residential properties. Whatever your reasons, you must know how to choose a good investment property.
Why is Real Estate a Good Investment?
The reason for the popularity of small-scale real estate investing is simple and it’s rooted in the track record of home prices since World War II. A well-chosen residence in an economically stable area has long been a pretty good investment because these properties tend to at least hold their value and they often appreciate more than the rate of inflation.
How to Pick a Good Investment Property
When searching for a good investment property, you should look to many of the same guidelines that would affect the value of a residence you were going to occupy yourself, especially the importance of a good location and a property that is in keeping with its surroundings. In addition, your rental property should be typical, not overly special and it should appeal broadly to most renters within a given price range.
You don’t want anything that will disqualify major segments of the market. For example, it should be near public transportation so that living there would not be dependent on owning a vehicle. It should also not have too hilly an approach or too many steps inside, which would turn away many elderly renters. Even that swimming pool you’re crazy about might not be appealing to a family with young, non-swimming kids, or people who don’t want to be bothered with its maintenance. Here are five additional tips for choosing an investment property that’s right for you:
- Low property taxes. Property taxes vary from place to place and, as an investor planning to make a profit from rent, you want a place where you’re not going to lose too much to Uncle Sam. On the other hand, high property tax is not so bad when coupled with a great neighborhood that has tenant longevity. The city’s assessment office will have the latest tax information and statistics on file to help you with your decision.
- Proximity to schools. Your prospective tenants may already have or may be planning to have children. This will put them in need of a decent nearby school district. The better the schools, the higher value of your property.
- Employment opportunities. Areas that have established or growing job opportunities tend to attract a lot of people, thus they attract plenty of tenants. The U.S. Bureau of Labor Statistics can supply you with the numbers on how a particular area is performing.
- Local attractions.Survey the neighborhood for current or projected parks, malls, movie theaters, gyms, historic public events, and all other perks that may be attractive to tenants.
- Average rent. You want to be sure the average rent of the neighborhood will be enough to cover your mortgage, property taxes, and other expenses. Up-and-coming neighborhoods are great for buying low and then eventually earning a big profit in rental payments on your investment.
Owning real estate is a great investment, especially in a volatile marketplace. However, it is important that you choose the right properties. Choosing the right properties means conducting research on prospective neighborhoods to find out crime rates, average rent costs, employment rates, property taxes, and other vital information. You will also want to property to appeal to and fit the needs of a wide-range of tenants.
Meghan Belnap –
Meghan Belnap is a freelance writer who enjoys spending time with her family. She also enjoys being in the outdoors and exploring new opportunities whenever they arise as well as researching new topics to expand her horizons. You can often find her buried in a good book or out looking for an adventure. Meghan recommends using Carter West to help with the purchase of investment real estate as they can help find the best option for you.