HOW TO DISCOVER A PROFITABLE RENTAL PROPERTY
One of the ways to achieve your goal of having a reliable passive income stream and becoming a success in the real estate market is finding a profitable rental property.
As real estate investors, we all start out wondering how to find a rental property to buy. The better question we should be asking is how to find a good rental property and what we should look for in our next investment property?
This article will guide you on how you can start investing in Rental Property with no money or credit of your own even if you’ve never bought your first real estate deal.
GET A TRUSTED REAL ESTATE AGENT
Ideally, the first thing you have whenever you are ready to pull a trigger and decide to buy your rental property or add to your rental portfolio is to consult a trusted real estate advisor. A reputable real estate agent or broker can mean the difference between a successful hunt for a rental property and coming up empty. He or she should know the neighbourhood well and advise you on which properties are best suited to your needs. This is especially important if you are looking for properties out of your current town or area. His or her knowledge of the area can be invaluable.
THE QUALITY OF THE NEIGHBORHOOD
Another major factor to put into consideration is the location! Location!! Location!!!
The quality of the neighbourhood that you buy a property and will actually influence both the types of tenants you attract and your vacancy rate. So, the better the neighbourhood in the mind’s eye of the tenant the less likely you’re going to have a vacancy issue. The flip side is that if they don’t like it as much, guess what you’re going to have? A vacancy rate and every time you have that vacancy rate, your profit will be down and definitely, you wouldn’t want that to happen. So get it up by first exploring the neighborhood before you buy the rental property. You can drive through the community and make sure that that’s what you want before you pull the trigger on that property as well.
ACADEMIC INSTITUTIONS
The next that you want to consider are the schools and specifically, if you’re dealing with family-sized or extended family-sized accommodations, you might want it to be considering the quality of the local educational facilities in and around your rental because what’s going to happen if you have, for instance, a three or four or five-bedroom rental property, who you are going to be attracting realistically are growing family that might want to be in a specific zip code and maybe the right home out there or they’re not able to buy a home on their own or maybe the right home is unaffordable for them right now for where they want to be but your rental is just the right price for them to live in. And it just so happens to be in the right school district for their kids to be able to get the education that they want.
The higher the school rating the more likely you are to find a long term tenant in the form of parents and their kids that are going to be in that school district for the whole time.
CRIME
The truth is that no one wants to live in an area full of crime scenes. So what do you do and how do you know if your rental is in a hotspot for crime. If you’re a local, you could take a drive through it. Maybe you already know what the rap is or maybe you don’t know what the rap is or you drive through it and check it out for yourself and you check it out at different times of the day and see if it’s going to be within your comfort to purchase in that area.
However, the best place to go for anything that has to do with crime statistics or something related is actually going to the police department or a public library in your area. With them, accurate crime statistics for the various neighbourhoods of the city that you’re living in can be accessed.
POPULATION GROWTH AND JOB MARKET
The local job market of that city is almost a major determinant. If there is going to be growing employment opportunities, then two things must be checked: First, you’re going to be having a lot of people flocking that city and there will be fewer homes available than the number of people coming in. With these indices, the rate of appreciation will go up, resulting in a huge return on investment.
Also, people will probably live there for at least one to two years where they figure themselves out, getting their employment situation taken care of and they are able to start learning the new city and learning where they want to live themselves.
So if you hear of a major announcement or a notice that a company is moving into the area that you want to purchase a rental in, that could be a good thing if you get there before and ahead of time so that you’re not the one getting stuck with the already home appreciation from another speculative or savvy real estate investor that’s going to sell it to you because they’ve already rented it out and they want to cash in on their home appreciation.
AMENITIES AROUND THE NEIGHBORHOOD
Another question you have to resolve is what’s going on with the potential neighborhood and what are the projected projects such as new parks, new malls, gyms, movie theatres public transport hubs, commercial activities, etc. that typically attract renters. For instance, not every renter has a vehicle. So being close to major transit or being somewhere around where they can have a little hub spot so to speak for transit is very important to them.
Another thing might be in malls and gyms and everything within a walkable distance maybe one mile out maybe two miles at the most. That can also appeal to people because it’s a really quick thing for them to get over there.
BUILDING PERMITS AND FUTURE DEVELOPMENT
What is the municipality planning and what information is available on any and all new developments that are coming or have been zone in and around the area rental? Knowing about the planning of new apartment buildings, business parks, malls, then is probably a good growth area is a good sign if you have these three things. At the same time, watch out for new developments that could hurt the price of the surrounding areas.
RENT
Know what the rental income will be because your rental income is the bread and butter of your rental property. Know what the average rate in the area is; know what’s going on over there. Talk to other homeowners. See what people are paying for in their houses. Talk about property taxes that they’re expecting an increase or whether the situation may be. And the easiest way to know what the rental rates are is actually to contact your trust real estate adviser. It all circles back to having a trusted real estate advisor just because you are an investor doesn’t mean that you should have taken all this on your own.
Find that real estate agent that’s really happy and experience with working with investors and they will help you get the best deal possible. They can also help when it comes to planning on renting out the property and also assist with putting you in touch with the property manager if you’re not going to manage a property yourself and they’ll let you know more about rental income. That’s a benefit of a trust real estate adviser just a few of them for you as an investor.
NATURAL DISASTERS
Look at natural disasters. Now, we can’t control those things obviously but what the reason they become important is you need to know whether you need earthquake insurance, flood insurance etc. You know what kind of insurance that you’re going to need to factor and add on to your total monthly mortgage with your principal interest, property taxes, homeowners insurance and then additional types of natural disaster insurances because all that’s going to cut into your bottom line you start factoring and looking at your numbers. Combine that with your vacancy rate and start getting an idea of whether that’s going to be the right property for you to purchase or not.
In general, the best kind of investment property for a beginner just starting out is going to be a single-family house or condominium. Now depending on your area, it might make more sense to go condominium. Depending on your area it might make more sense. Go single-family condominiums are going to have to pay fees obviously there are like a multiplex are essentially an apartment complex but now being sold to people to be able to purchase and own them.
However for the purpose of getting started, do what makes sense, run your numbers, be honest with yourself and be realistic with yourself. Work with a great trust a real estate advisor that’s going to help you. Plan out your success into your having profitable rental properties.
To know more about Middlechase Property Limited, click on the link below: Middlechase Property Limited or call 08186577504.
