Finding and buying investment properties can be incredibly beneficial. It can give you a passive income source, as well as diversify your investments. Whether a seasoned pro or just getting into the property game, below are some features you should look for when scouting property.
When dealing with property, you want to make sure it’s in the right location. If you’re using investment properties for rentals, the neighborhood will determine the type of tenants you will attract, as well as determine your vacancy rate.
While figuring out your gross annual income, keep potential rental gaps in mind and figure them into your calculations. If you buy property close to a university, you will probably attract many students. This could be a good thing because you’ll have a lot of potential tenants to choose from, but it could also mean that during the summer months when school isn’t in session, you won’t have anyone renting your home. This could be overcome by making tenants sign a 12-month lease.
Finding the right location means figuring out exactly what your end game is. An up-and-coming neighborhood has a lot of potential. If you want to play it a little safer, then looking for a home in an established area that has seen steady growth is a good idea.
Property taxes can change from one area to another. If you want to make money from renting out the home, then it’s important to factor in how much you’ll have to pay for property taxes to determine your bottom line.
Finding out how much property taxes are in a certain area will require doing some research. This may mean talking to assessors or to homeowners in the area. It may also be prudent to assume that taxes will rise in the next few years. In 2017, the average property taxes in the U.S. increased by 6%.
If you are looking at a property with high taxes, don’t automatically remove it from consideration. If it’s in a good area and the amount of rental income will offset the cost of the taxes, it still may be a profitable investment. Take the time to consider all angles before making a final decision.
If you’re uncertain about the crime rate in an area, before investing in property, find out. Talk to the police or get crime rate statistics that focus on the local region. Don’t trust talking to the current seller. If it is a high crime rate area and they want to get out as soon as possible, they may not be truthful.
When looking for crime rate information, things to be aware of include whether the activity has been up or down in recent years, if there’s a lot of vandalism, and how many serious or petty crimes have been committed. Keep in mind that no area will be completely free of all crimes, but some will have a lot fewer issues than others.
When looking for a property that has a higher chance of being profitable, you’ll want to look for houses near a school. Most parents want the best for their children, so having access to a good school is beneficial for them—and for you. Remember, the location of the property will determine the type of tenants you attract, so if you’re looking for families with kids, having a house near a school can be beneficial.
This should go without saying because no one wants to live in an area that’s dirty or has the potential to get dirty. This will include trash pickup services, how well the sewer system is maintained, how well stormwater drains, and so on. If there isn’t a sewer system, then it’s important to ensure that the septic system has been well maintained. Otherwise, this could be a deal breaker for a lot of people.
While you have no control over the weather or any other accident from occurring, there are some places in the world that are more prone to certain weather conditions than others. If investment properties are located near tornado corridors, areas where fires break out frequently, or regions where flooding is a distinct possibility, it won’t be a profitable investment.
Tenants don’t want to risk losing their belongings or their lives so it may be prudent to look elsewhere for a rental. For other ways to help a tenant feel at home and to see the best way to help them settle into their new home, you might consider partnering with Blueground. We have the resources to answer any questions you might have about the rental process or ensuring that the property is ready for tenants.
This can apply to both public transportation access and access for personal vehicles. Renters want to know that they can get to their home or place of employment with little issues. If they don’t have a car, then having access to public transportation will be beneficial. If they do have a car, they don’t want it to be torn up on streets that are poorly maintained. This can include gravel roads that don’t get graded or asphalt roads that are full of potholes. There should also be adequate parking available for tenants. It can be incredibly frustrating to not be able to park close to their home. If they are paying for a place, they want to know they can easily access it.
While it’s not possible to know for sure if the property you want to invest in will be profitable, there are some features that are more beneficial than others. In addition to taking the above into consideration, it’s also important to keep the property in good condition and looking pristine. No one wants to live in a place that looks like it’s going to fall down. Taking the time to keep up appearances will ensure that tenants are interested in your property and willing to pay to live there.