Are you looking to diversify your investments by taking advantage of the current boom in real estate? According to a property management group, passive investment and ownership of real estate properties like 2 bedroom townhomes can not only provide additional short and long term investment, but also tax benefits. Being a cautious buyer and taking time to do necessary research in the initial stage can save you from costly errors in future. This investment strategy can be challenging so you’ll need to research on rental property listings and learn all you can about property management.
Here are some tips when buying rental property:
Buy at the right price
To get a feel of the demand in the area, compare rental prices for similar units. Take time to research and check the local classifieds as a basis of how much to charge. Factor in utilities like electricity, gas, water, sewer, oil and cable before deciding how much to charge.
Different investors have different goals. The spread between total monthly cost in utilities, taxes and mortgage and how much to charge may not be enough depending on your goals. Set your spread in relation to your personal goals and analyze investment against the set amount. As an investor looking to make yearly profit with no additional costs other than the down payment, as a rule of thumb use at least $500 spread per month between income and total cost.
As an investor, the goal is to have a bigger spread to make more profits. The spread can help in decision making when considering other options to go for.
Find the right neighborhood
Working class neighborhoods, mostly in lower and middle income areas where business people and tradesmen reside have a high demand for apartments and other rental properties. I have had the best luck in these areas. My tenants understand the value of hard work and appreciate my efforts of keeping the property well maintained. Your commitment of making the neighborhood a better place will never go unnoticed in such areas.
You should always strive to be the best landlord, the neighborhood you go for notwithstanding. Correct any issues with the property and carry out regular maintenance of your property to avoid complaints or citations. This will go a long way to showing your commitment of improving your property and add a positive reference to your work, to both the residents and the local authority.
Be aware of local rental regulation
Many local authorities do not treat rental properties as residences but as a business. While 8-10 might be considered as a proper bedroom in a personal home, it might not be considered as proper for rental property. Some townships have minimum requirements for rental properties different from residential. For instance, we have properties in areas with minimum square footage (100sq ft) and ceiling height (7ft) for rental bedrooms. Occupancy in many townships is calculated in square ft and what a realtor promotes as four bedroom house may only pass as a two bedroom if rented.
Don’t buy a rental property that does not have a permit or ones which have not met the local rental regulations. Doing so might cost you massive expenses in renovation and upgrade work to meet the township rental code.
One safe assumption you can make is that your property will have to meet local rental regulations before bringing in any income. This will help you budget accordingly.
Ensure proper parking is available
Parking requirements for both residential and rental property differ from one township to another. Rental real estate have strict parking requirement as compared to residential homes. You are required to provide paved off-street parking space for each tenant old enough to have a driving license. And this requirement holds water whether or not the tenant has a car or not.
Some new parking regulations are being passed in some municipalities like a flat, sliding scale per square footage or per-property parking. Most landlords owning rental property with no enough space to meet the parking requirements are forced to retrofit or sell their property.
However, Off-street parking can make your property more desirable to tenants who care about the safety of their cars. Landlords can attract and maintain quality tenants by offering off-street parking space that are protected.
Look for simple construction
Go for a house with simple but solid construction, made of standard materials that are easy to access. Homes with leaded glass windows, slate and steep roof may look attractive, but can be very expensive to repair, if you find a suitable replacement in the first place.
The general rule of looking for simple construction is the shape of the construction. The more complex the construction, the more the maintenance cost. A four-corner house is the cheapest to maintain and simplest to add on to.
When scouting for a potential investment, consider the condition of plumbing, cooling and electrical systems and whether the systems are easily accessible for maintenance work. Look for properties with small, simple lawn, a beautiful and manageable garden and patio, if you find the right property but without a garden, then be sure to contact whatforme.com. Less maintenance for you and your tenants should be your goal, with a small patio you can add a nice décor, one thing you should never forget is the repellent light like the fuze bug, this will insure no bugs outside. If you’re buying vacation rental properties, it would be wise to consider working with someone who knows and is experienced in property management like a vacation property management company.