5 THINGS TO LOOK FOR IN AN INVESTMENT PROPERTY

Not all investment properties are created equal. If you’re on the hunt for a long-term real estate investment, you need to understand what you’re looking for, and you need to know what your prospective renters are looking for, as well.

Here are the five things that should be at the top of your checklist.

1.     Location: A desirable location is key to getting a good return on your investment. The location determines the amount of rent you can expect to receive, the quality of your renter, and the vacancy rate you’re likely to experience. Look for a property that is situated in a neighborhood with good schools, a thriving job market, public transportation, amenities and low crime rates. Properties located in up-and-coming areas are also a good option as they are likely to increase in value over time. Vet the neighborhood thoroughly!

2.    Potential for rental income: Consider the potential rental income that the property could generate. Look at the local rental market to see what similar properties are renting for and whether there is demand for rental properties in the area.

3.     Consider all possible expenses:  Beyond the initial costs of buying a property, you also must consider expenses such as:

·       Homeowner’s association (HOA) fees

·       Property insurance

·       Property taxes

·       Rental income taxes

·       Maintenance costs, repairs, and general upkeep

·       Operating expenses

·       Vacancy rates

And don’t forget to set aside an emergency fund… a percentage of the earned income to      cover unexpected costs.

 4.    Condition of the property: Before investing in a property, it's important to carry out a thorough inspection to assess its condition. Look for any signs of damage or structural issues that may require repairs, as this could impact on your overall return on investment. A well-maintained property may command a higher rental income and be more attractive to potential tenants.

5.     Long-term investment potential: Consider the long-term investment potential of the property. Know the area’s selling prices to get a sense of local market value. Determine whether house prices are likely to increase over time, and whether there are any plans for new development in the area. A property that has good long-term investment potential will be more likely to increase in value over time, providing a good return on investment.

A smart investment is a rental property that appreciates in value. For you as an investor, appreciation works after you buy the property, and again when you sell it.

When you buy, look at the appreciation potential that you can get from doing repairs and upgrades to the property. How much more will you be able to charge for rent after a fresh coat of paint, adding new appliances, or light fixtures, compared to what it would be worth as-is?

The other thing to look at is how much the property will be worth when you sell it. In general, all land is going to appreciate a little bit over time. You want an investment that will increase as much as possible over the time that you hold it.

With some real estate savvy and these tips, buying a rental property as an investment can yield excellent returns. If you’re ready to enter the real estate market to get some great returns, give the team at Spitzer Rutland a call!