Negosentro.com | 7 things to look for in good property to invest | Investing in a property is one of the best ways to earn a form of passive income. However, you should also understand that not all properties are created equally. Consider these 7 things to look for.
Location
When it comes to choosing a property to invest in, location is essentially everything. If you have ever heard the phrase “location, location, location”, it’s to capitalize on the importance of where you are investing your money. Getting a great return on your investment starts with choosing an appealing location. The reason why you need to focus heavily on location is because it determines the rent you are bringing in, the vacancy rate that you’ll experience, and the quality of your renter.
In addition, you will have to look at the environment around the property. Are the job markets thriving? Are the schools good? Do the entertainment venues, parks, restaurants, post offices and medical centers have stability? These are some of the questions you will have to answer because this affects the property’s appeal indirectly.
Low Maintenance
There are specific investment properties that will take significantly more time to maintain than other properties such as student and vacation rentals. In low-quality areas, these properties will not only have higher turnover rates, but more work will be required on your part. If you have a low maintenance property, it will require a long-term, stable renter to match. Investing in these kinds of properties won’t give you a flash in the pan, but it will give you a strong and steady income.
Appreciation
Another important factor to look for when you are investing in a property is the potential for the property to appreciate. As an investor, appreciation works when you buy and sell the property. When you make the purchase, look at the potential that you can receive from cosmetic upgrades. You can determine how much you can charge for rent after you’ve re-painted the walls or work on other cosmetic upgrades.
When selling the property, you should want the investment to increase in value over time. While all land appreciates over time, what you should be focusing on is what it will be worth when it is sold down the line. Brisbane Buyers Agency has more helpful information for you on this regard as well.
Property Taxes
This will likely vary across the area that you are investing in, but you will need to understand how much you will be losing in property taxes. High property tax rates aren’t always a bad thing because you will increase your chances of attracting long-term tenants. In order to consult specific information, you’ll want to contact the municipality’s office. One specific question you will want to ask is whether or not property taxes will increase in the future, because a town that’s experience economic depression will hike taxes at a rate that will turn off landlords.
Average Rent
One aspect of investing in a property that many entrepreneurs do not take into consideration is the average rent. Your rental income will be the key to what you are taking, so you need to acclimate yourself to what the average rent is in the area. When going about this, you need to consider taxes, mortgage payments and miscellaneous expenses. You could potentially get into a situation where you’ll need to file for bankruptcy if you have the funds to afford the area now, but don’t account for tax increases later.
Natural Disasters
This is one thing property investors tend to overlook. Another expense that you will have to account for is insurance. Insurance is something you will have to subtract from whatever you get in return. Therefore, you need to know how much disaster insurance will cost you. This is especially the case if you are investing in an area prone to flooding or earthquakes.
Listings/Vacancies
If the neighborhood has high listings, this can potentially be a precursor to either decline or a natural part of a seasonal cycle. You need to discern for yourself what it is. Landlords charge lower rents to attract tenants if there are high vacancy rates. However, low vacancy rates allow you to charge more.
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About the Author:
Eric Reyes is a passionate thought leader having been featured in 50 distinguished online and offline platforms. His passion and knowledge in Finance and Business made him a sought after contributor providing valuable insights to his readers. You can find him reading a book and discussing current events in his spare time.
