When people bought their first homes during the pandemic, many lived in them. On the other hand, others bought homes to offer them in the market as rental properties. This is particularly true if they buy properties in areas with nearby attractions.
If you plan to buy properties for investment purposes, you should make sure to take into account several factors before finalizing the purchase. Additionally, you should also look into the building commissioning report, especially if you check out a condominium unit. These reports provide you an idea of all the amenities and features of the building are working properly.
When looking for properties, you should start on your own to avoid getting pressure from an agent to buy before you find properties suitable to your needs. You can use property investment websites where you can find details about properties you may be interested in. Here are some features that you should look for before you buy a property for investment purposes.
Property Taxes
Property taxes depend on the state where you bought the property. So, you should look into the rates before you finalize the sale to avoid losing money on your investment. While high tax rates may not be great in areas that are not appealing, some areas with high property taxes also attract long-term, high-paying tenants.
You can check the rates at the assessment office of the municipality. Another option is talking with homeowners living in the community. You should also look into the possible increases in property taxes in the area. This typically happens when a town is in financial distress. In this situation, the tax increase can be beyond what a landlord can afford.
Average Rent
You should also check the average rent in the area since rental will be your main source of income. You should take into account the expenses associated with owning a rental property. These expenses include maintenance costs, mortgage payments, property management fees, and taxes, among others. With this, you should forecast expenses and see if the average rent in the area can cover expenses in the next five or more years. You should also consider increases in expenses, especially property taxes, since they significantly affect your income.
Community
A good neighborhood will make your rental property appealing to tenants and reduce the time when it is vacant. The neighborhood also plays a role in the type of tenants that you will have for your property. For instance, rental properties near universities will have more students as potential tenants. It also means vacancy during summer vacations, and you have to find different ways to fill it.
Amenities
The amenities available in the area also play a role in making the rental property appealing to potential tenants. Tenants normally look for properties located close to parks, gyms, restaurants, medical clinics, and public transportation hubs. These amenities may even allow you to offer your property at a rate higher than you initially planned. You can check out nearby public amenities at the city hall, which normally has information about these features in the neighborhood. The promotional literature also offers information about amenities that you can find in private properties.
Crime Rate
You should also consider the crime rate in the area. If the area is close to a criminal hot spot, you may want to look somewhere else. You shouldn’t focus only on major crimes, but minor ones as well. These crimes include petty theft, vandalism, and trespassing. While they are minor crimes, they can still affect the marketability of your property.
You should also check the police presence in the neighborhood even if the crime rate is low. The local police station will have the information you need about criminal activity in the area. You can also check the local public library for the latest statistics on the crime rate in the area.
Listings and Vacancies
If you notice that the neighborhood has many listings, you should check if this is a seasonal cycle or if the neighborhood is already on a decline. It is not ideal to buy a rental property in a declining neighborhood since you will find it challenging to attract tenants to your property. It may even force you to lower the rent that can affect your income.
On the other hand, low vacancy rates mean that the area is thriving, and many tenants are looking for a rental property in the area. It also allows you to have a higher rental rate than what you initially planned to offer.
Buying rental property is a good investment decision for anyone with extra funds. But you should make sure to check the factors that will affect your rental income in the future.
