Investing in Rental Property
You may have found many complicated definitions of rental property online, which instead of clarifying things, may have made it more difficult for you. In simple words, it is a property from which the owner charges a fixed sum from the tenants for occupying or using his or her property. The owner of rental property may take certain tax deductions such as mortgage interest and depreciation as well.
The investments you make into your business largely depend on whether you want to hire a professional property manager or want to handle it yourself. In case you want to manage the properties yourself, aim for properties near the location you live. The following are some imperative things that you should consider when searching for the right rental property.
Neighborhoods: The type of tenants and frequency of vacancies directly depends on the quality of your neighborhoods. For instance, if you buy a rental property near a college or university, then most of your potential tenants will be students. Therefore, you will face vacancies on regular basis as students vacate properties during vacation or graduation when they return back home.
Property Taxes: Property taxes vary from state to state. As you are seeking a property to generate income, you must know how much are you losing to these taxes. Never leave a good property just because of high taxes as you might get long-term tenants for your property.
Crime: Obviously, no one would want to live in an area with criminal activity. Before investing in any property, always go to the police station, public library or internet to get accurate crime statistics of the area or neighborhood. Ask for vandalism rates, serious crimes, petty crimes and any recent crime activity that has happened.
Job Opportunity: any location with growing employment opportunity will fascinate more tenants. Go to the U.S. Bureau of Labor Statistics and check how a particular area rates. If you see some new major companies are coming to your area, you can invest in them, as workers will definitely move to that area for employment and to live.
Amenities: When it comes to finding potential neighborhood, always check for amenities such as parks, malls, gyms, theaters, public transport hubs, etc. to allure renters. Sometimes, cities or any area used to have many promotional literatures that will give you an idea of where you could find the best public and private properties.
Future Development: Go to the municipal planning department to get information about all the new development that is coming or has been done into the area. If any area has new condominiums, Business Park or malls coming up, then it is probably a good area to invest in.
Rents: You are searching for property to give on rent and get regular income, so you must know what is the average rent in that specific area.