Investing in real estate can be overwhelming for a first-time investor. This is because the real estate investment industry consists of many different situations and scenarios that can grow your portfolio or destroy your returns. The options for investing in real estate are endless, and so it is imperative to understand the market and opportunities available in your area.
If you are considering renting out your investment property you need to make sure that your unit is competitive in the rental market.
While deciding to purchase an investment property, you should consider the following key areas:
Locations with a growing job market tend to attract more people. More people means more renters. You can also check to see if a large corporation is moving into your area. If this happens, migration will follow. Properties close to universities will also bring a steady flow of students needing off-campus housing
Location is everything. The quality of your property’s location will influence the quality of the renters that will be attracted to your rental property. To get the best quality of renters your rental property should be near walking paths, transportation routes, hospitals, schools and universities, major business centres, local restaurants and shopping. The more central the location, the higher the demand for renters – meaning your vacancy rate will be low and your return on investment high.
Having a constant and steady rent is a staple when considering investing in rental properties. You should research to find the estimated rental value in the area and see if this matches your ideal rental amount. After all, you still need to cover your mortgage payment, taxes, insurance, and other miscellaneous expenses.
You should also check to see if the condo with your investment property has a rental pool. Joining a rental pool is a great way to secure monthly revenue from your unit even when the market is unreliable.
Owning an investment property in a safe neighbourhood is vitally important. This is because no one wants to live in an unsafe area. You will attract more renters if your property is in a safe area.
Having excellent facilities will make your rental property stand out amongst all of the others on the market. Does the condo building have a gym and underground parking? Building amenities are as essential as location amenities. Is your property close to local attractions?
One of the main criteria for renters could be what school district your building is in. Being in a good school district will attract more tenants with the potential to be long-term tenants. This could increase the overall appreciation of your investment property.
What developments are planned for the area that your rental property is in? Will you tenants have to listen to construction work 24/7? This could have a negative impact on the value of your investment property and quality and quantity of your renters.
Property owners have to pay property tax – unfortunately, there is no way around this. Before purchasing an investment property to rent out, you should look at the taxes and current market value and determine if these rates are reasonable.
Jumping into the unknown and hoping for the best is risky business – especially when it comes to real estate investing. Real estate investing has never been a fool’s game. You must do diligent research into the local market conditions before purchasing a property.
You should also consider hiring a property management service to handle the day-to-day operations of your investment property. This will ease your mind and give you back your spare time.