Key To A Successfull Rental Property
When you make a decision to invest in real estate and buy a rental property, there is a long process to complete. This can be overwhelming for a new investor. Owning property isn’t easy and this industry has hidden traps that will influence your returns. Here are the key things you should consider when looking for a rental property.
1. Location
The quality of the location in which you want to buy property will influence how often you will have tenants and who they will be. For example, if you buy in an area with a kindergarten, you will probably have families with children as your tenants. You will also face vacancies on a regular basis (for example, during summer).
Check the area for parks, malls, gyms, transport hubs, and other things that attract people.
2. Financials
Rental income will be your money for the property, so you want to know the average rent in the area. If the average rent is not enough to cover taxes, mortgage payment, etc., you might prefer to keep looking. Be sure to check where the area is headed in the next few years. If you buy there now but major improvements are coming, property taxes will be higher so keep that in mind.
3. Property Management
One of the key things you should do is to keep up with property maintenance. This is vital for several reasons. First, there is a landlord/tenant law and you have to keep your property up to safety and health standards. This means making sure tenants have a place to put their garbage and the tenant’s common areas are in proper condition.
Second, if you don’t maintain your property, you won’t be able to locate and retain tenants. Most people don’t want to live in places that may be infested with insects or deal with constant issues.
4. Good Tenants
Another important thing for a successful rental property is keeping your tenants happy so they will write positive reviews and keep backing you. There are simple things to ensure your tenants are happy, such as making sure you rent your property to other good tenants and responding to repair requests quickly.
One of the main reasons tenants move out is because they don’t like their neighbors. Having a strict screening process will help you find good tenants.
5. Property Features
As a rule of thumb, the older the property, the more you will have to spend on maintenance. The newer a property, the lower your maintenance expenses. Property features are a crucial factor to consider. The main reason you should keep it in mind is that a property that requires a lot of work can drain you of your money and won’t bring you any profit. It doesn’t mean you should never buy a better property, just make sure you know about all the expenses and whether you can cover them.
In addition to how much money you’re ready to spend on maintenance, you must also consider your effort and your time. Don’t accidentally get into a property with lots of issues, not realizing how much time and effort it requires on your part. If you want to avoid headaches, make sure you only buy a high-quality property, even if you have to pay more for it. It is usually more profitable in the long-term.
When you’re in the market for a rental property, be realistic about your expectations and make sure you can wait for a property that will make a profit rather than make a purchase immediately.