If you are thinking of purchasing a property or you are looking to boost your investment portfolio by adding rental properties, this article is for you. Investment properties could be a very rewarding investment if managed correctly. Therefore, finding the perfect and suitable investment property for you is a crucial step in the success of your future investment.
Things to consider
Before you dive into investing, you will need to perform a detailed analysis and research of the different variables out there that have an effect on your investment and therefore your decision. Find below the most important aspects to consider when looking for that perfect investment.
Location is always going to be key. The location will determine the type of properties available as well as the type of tenants that you are going to attract which is essential for your vacancy rate.
This will vary according to the location area of the property. You will need to pay close attention to this item as it will directly affect your return on investment.
The quality of schools around your property area can have an effect on the value of your property.
There are several resources available from which you can have access to accurate crime statistics for neighborhoods. You will need to consider these rates as they can affect your vacancy rate.
You can find out specific rates and statistics for job availability with the US Bureau of Labor Statistics. Keep in mind that locations with growing employment opportunities will definitely attract more tenants.
Amenities and Entertainment
Check out the neighborhood for parks, gyms, restaurants, public transportation, and other amenities for the tenant entertainment.
It is important to get information about future development and plans in the area. A growing area is really attractive for tenants.
Rents around the Area
Your rental income will determine the success of your investment. Take a close look at the average rent around the area and make sure your rental income can cover the mortgage payment, taxes, and other expenses.
Types of Property
Now that we have covered and considered these important items, let’s take a look at the types of residential properties out there for you to choose from:
- Single-family home: House in which only one family lives in.
- Multi-family Home: For example duplexes and triplexes. This house has multiple spaces that may be shared by hallways.
- Apartment building: A building with multiple apartments.
- Condominium: Is a building structure dividend into several units that are each separately owned, surrounded by common areas and amenities.
- Townhomes: Are multi-floor homes that share one to two walls with adjacent properties but have their own entrances.
Tips and Recommendations
Here are some important tips and suggestions to consider when deciding what type of property would you acquire:
- Usually, the best investment property for beginners is a single-family house or a condominium.
- Single Family homes tend to attract long term tenants such as families and couples.
- Condominiums have low maintenance cost due to the fact that the association takes care of external maintenance jobs and repairs. On the other hand, condos generate lower rental income and appreciate more slowly than single-family homes.
- Even though you will depend on good projected cash flow from your rental income, the appreciation potential of your property is also really important for your property investment in the long run.
- Keep in mind that a few repairs and renovations can increase the value of your property as well as attract tenants that are willing to pay higher rents.
- Make sure to check local rules and regulations about renting your property, as this may vary between different locations and property types.
We have analyzed a number of factors to consider when you decide to invest in a property. Property investment is one of the most lucrative ways to make out of your money. Becoming a property investor is a journey that starts with detailed research and these tips will help you make your way on that profitable journey that you are seeking.