If you’re looking to purchase your first rental property, you may be excited by the prospect of making huge profits. While the real estate industry has turned out some of the richest people in the world, it isn’t for the faint of heart.
There are many things to consider when buying a rental property, many of which can crush your profits if not done right. Before you rush out and buy that two-family home you’ve had your eye on, take a look at the top features of a profitable rental property below.
The neighborhood in which you purchase your rental property will dictate the type of tenant you attract and how often you’ll need to worry about filling vacancies. For example, if you purchase a property near a college campus, your rental will attract college students who don’t always make the best tenants. Further, you may struggle with vacancies during summer break.
You’ll want to pay close attention to property taxes on your rental property. High property taxes aren’t always a bad thing, especially if the property you buy is located in a nice neighborhood that attracts long-term renters. On the other hand, a town in dire financial straits may raise the property taxes higher than you can afford to pay.
If you’ve bought a family-sized rental property, be sure the area schools are well-rated. If they aren’t, you may want to consider looking elsewhere for a rental property since poorly rated schools can make your property worth less if you decide to sell it.
No one wants to live in a crime-infested neighborhood, so you need to check with the local police department or library for accurate crime statistics in the neighborhood you’re considering purchasing in. Pay close attention to whether crime rates are up or down compared to recent years to determine whether the area is safe enough to attract and keep good tenants.
Neighborhoods with plenty of job opportunities will attract more interested tenants. Again, check with your local library or the U.S. Board of Labor Statistics to learn more about the job market in the area and whether there are any large companies coming into the area that will offer more job opportunities. While this may cause a rise in home prices, it is the type of thing that attracts renters far and wide.
A neighborhood located near the types of entertainment and services people need will be a prime rental property. Take a tour of the area and take note of all the restaurants, grocery stores, nightclubs, etc. located nearby. If there is a lot to see or do near your rental property, you should have no trouble attracting renters.
These are but a few of the things you should consider when buying a rental property. While there is a lot of money to be had in real estate investing, there are several things that can affect your profitability. Be sure to do your research before jumping into any investment property.