Making the decision to first invest into real estate and then buying homes for rent involves a variety of considerations. These tasks can seem daunting for the first-time investors and owning one or more properties is not an easy business and is often peppered with the types of land mines which are able to obliterate the returns. Here are some of the top considerations when shopping for homes for rent.
Beginning The Search
Even though it may seem the wisest decision to use a reputable real-estate agent in order to complete such a purchase, it is best to begin searching for homes for rent independently. Bringing in an agent too soon can bring about unnecessary pressures to purchase before finding the property that actually suits the buyer.
The investment range will also have limitations in regards to whether the investor wants to manage this property actively or to hire a company in order to manage the property. If the investor intends to manage their own property, it is advisable to invest houses for rent that are in close proximity to where the investor lives. If the investor has chosen to use a property-management business to manage the property, the location of this property is less important.
Below are 6 of the top considerations when in search of the right types of homes for rent:
1. The Neighborhood
The qualities of a neighborhood that the investor decides to purchase in will have an influence on the tenant types that are attracted to this area as well as how frequently the investor will be faced with vacancies. An example of this can include, buying a rental home in an area that is close to an educational institution such as a University. The chances will be high that the potential tenants will mainly be students which mean the property will be subjected to vacancies fairly frequently.
2. Property Taxes
The property taxes are not standardized, and the investor who is planning to make a return from the properties they plan to rent out need to know about the amount they will lose to taxes. The higher property taxes is not always a bad aspect when the neighborhood is proven as an excellent location for quality and long-term tenants, but these two factors do not always go hand-in-hand. The assessment office for a town will have this tax information on record or the investor should talk to the homeowners in these communities.
Nobody will want to live in close proximity to a hub for criminal activities. For this reason it is advisable to check with the public-library or the police for crime statistics on the different neighborhoods. Aspects to look out for include petty crimes, serious crimes and vandalism rates along with recent activities that show either slowing down or growth of the crime rates.
4. Job Market
The neighborhood with employment opportunities that are on the rise usually attract a lot more people that translate into more tenants. In order to gather this information on specific areas, the U.S. Bureau of Labor Statistics offers important information on any new companies planning to move into an area.
The investor should find out about projected or current public transportation hubs, movie theaters, shopping malls, gyms and parks or any other perks that will attract renters.
6. The Amount Of Listings And Vacancies
If the amount of listings is unusually high in a particular neighborhood, this is a sign of a seasonal cycle or perhaps a neighborhood which has “gone bad.” It is important to establish what the cause is before investing in an area.
All of the states feature good cities and each of these cities feature good neighborhoods and each of these neighborhoods will have good properties. However, it takes research and footwork to line them all up. When finding the ideal homes for rent, the investor needs to have realistic expectations and to ensure that their personal finances are in a good state of health so that they are able to wait for these rental properties to start bringing in a cash flow opposed to desperately needing it. The right way into real-estate investing does not begin with purchasing a rental property, but rather with the creation of financial situations that allow the investor to buy into rental properties.