Do Your Own Research
One of the first things you’ll want to do when looking for an investment property is research. To make sure you know exactly what you’re getting into, you might want to roll up your sleeves and go investigate for yourself.
Walk or drive around the neighborhood. Go out and talk to people, and get first-hand information about the area. If you don’t know all of the perks (or negatives) that this area has, it’s more challenging to figure out a rental price on your investment property. You want to make sure that you are receiving enough money for what the property is actually worth.
Be sure to go to this area at different times of the day. You will want to see what the neighborhood is like early in the morning, in the middle of the day, and at night. By visiting at different times, you will also get a better idea of who the neighbors are.
The Value of Your Rental
It is very important to know what your rental property is worth. If you don’t understand it’s value, you won’t know what to charge for rent. In addition to exploring the neighborhood and surrounding areas, you should also look at properties near your area that are similar to the one you want.
This will help you get a better idea of what people in that area are charging for rent and could also help show you a ballpark figure on what you will pay to buy it. You can also do some behind-the-scenes work and check online sites like Craigslist, look at ads in the newspaper, or just show up at open houses.
Don’t Overdo it
Of course, you want your rental property to have that curb appeal that will make a potential renter stop dead in their tracks. However, make sure you don’t overdo it. There is a big difference between fixing a place up and completely redoing it. It may look fun and glamorous on all the TV shows, but in real life, all of those modernizations can really add up. It is fine to update your property with more modern fixtures or replace the oven and stove. But experts suggest you stay away from investment properties that need really expensive things like new piping, a new AC unit, or all new electrical wiring.
By avoiding large investments and unnecessary upgrades, you can be sure that you will have more money coming in that money going out. Also, remember that regular maintenance issues could pop up at any time. Keeping these tips in mind will help ensure that at the end of each month, you’ll have money to put in your pocket.
Choose the Right Tenants
While this might seem like the most obvious thing that you can do, sometimes investment property owners really don’t think about this until it’s too late. By checking out the neighborhood and nearby areas, you will get a better idea as to who would be a good fit for your property. Is this area filled with young couples taking their kids to the neighborhood playgrounds? Or is it more geared towards older people who just want to live in the peace and quiet?
You won’t want to rent out your property to some college roommates if it is the latter. Always make sure you do the proper background checks, as well as checking previous rental history. You will want to make sure that they don’t have a history of missing monthly rent, throwing wild parties, or seem to always have issues with neighbors wherever they go.
Whether you’re someone who owns a bunch of investment properties, or someone who is looking to purchase their first one, there are plenty of tips out there that can help make your entire process easier stress-free. Take your time, do the proper research, and make sure you don’t get too far in over your head.
Student Loan Hero. “How to Pick the Perfect Investment Property in 9 Steps” Retrieved from: https://studentloanhero.com/featured/investment-property-pick-9-steps/. November 9, 2018.
Investopedia. “10 Tips for Buying Your First Rental Property” Retrieved from: https://www.investopedia.com/articles/investing/090815/buying-your-first-investment-property-top-10-tips.asp. November 9, 2018.
Fit Small Business. “28 Tips for Buying Your First Rental Property from the Pros” Retrieved from: https://fitsmallbusiness.com/buying-your-first-rental-property-tips/. November 9, 2018.