What to Look for in an Income Property

HousesWith the real estate market so hot right now, for both home sales and rentals, it may be a great time to think about investing in an income property. But what exactly is important when looking for a rental property? Of course you will need to consider your budget, but what other factors should you pay special attention to? Here are a few things to keep in mind as you prepare for your search:

  • Location, Location, Location. This has long been considered the number one rule of real estate, and it is certainly at the top of the list for the rental market as well. Location will ultimately determine the amount of rent you can charge and the type of tenants you will attract. Things to look for include: access to highways, shopping, restaurants, commercial centers, and schools.
  • Look for long term growth. While some investment buyers are looking to flip properties, it is much less risky to look for a property in a high-demand area that will give you steady, long-term growth. This will ultimately continue to pay you a return on your investment well into the future.
  • Think about the property’s potential. Look past current cosmetic issues and get creative in thinking about what the property could be. However, do make sure major items such as plumbing systems, roofing, etc., are in good condition by having a home inspection done.
  • Pay careful attention to the floor plan and architectural features. These are things that can be more difficult and expensive to change. Renters are looking for a logical layout that is both functional and aesthetically pleasing. Choosing an investment property with good “bones” will save you in renovation costs, attract a stronger pool of renters, and allow you to charge more in rent.
  • Make smart choices about upgrades. When evaluating a property’s potential and the true cost of purchasing it, including renovations, be sure to stay a bit on the conservative side. You don’t want to max out your budget here, especially if the property is in good enough shape to rent out as is. Remember, you can add further renovations down the line and put your current funds towards securing the best location you can afford.
  • Is it in your price range? Yes, you are making an investment, but you do not want to exceed a budget that is comfortable for you. In addition to the price of the home and any renovations you have planned, make sure you calculate the cost of insurance, property tax, utilities, management, and regular maintenance before taking the plunge and becoming a landlord.

Should you have any further questions about income properties or the rental market in our area, please do not hesitate to contact me at courtney@courtneybuie.com.

 

Image: http://www.stockfreeimages.com/

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