Low home interest rates make it more tempting to
plunge into the rental business for the first time or to increase
your role as a landlord by purchasing additional properties.
Especially for first-time landlords, it’s a wise idea to work with a real estate agent who has effective property search skills for investments, such as home rentals. Realtors who are interested in repeat business from real estate investors need to be careful in their recommendations and show true care for these clients.
When researching good buys, here are four profitability measures that investment owners and their realtors should consider.
Number of Local Vacancies. Even if a property is priced well and requires little fix-up, its moneymaking potential may be poor if there is a high rental vacancy rate in its neighborhood.
It’s also good to consider total number of listings for a neighborhood. If the number is high, the question to ask is whether that is caused by seasonal changes – such as in a college neighborhood – or if the area is declining.
Average Rents. Check out the average rents that are being charged in the neighborhood you are researching. Consider whether this amount will be sufficient to cover monthly mortgage payments for the property under consideration.
Safety. Even if you are primarily looking for real
estate listings in areas with lots of college students, it is
helpful to seek out neighborhoods that have good preschools, as well
as elementary and secondary schools. Tenants will likely stay longer
if an area meets their children’s needs.
Crime statistics also require attention and can be found through neighborhood newspapers, online realtor websites that provide neighborhood profiles, and local police stations.
Local Amenities. Prospective tenants are interested in areas that meet their needs for basics, such as markets, playgrounds and laundromats. However, properties that also are near amenities, such as libraries, restaurants and recreation facilities, practically shout the three “Ls” of location, location, location.
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