If you want a secondary income stream, it would be a really great idea to invest in the property business. Not just as a long-term investment, such as waiting for property prices to rise in the area you have invested so you can sell it, but also in the form of rental income. This will give you a very steady income stream that you can utilize along with your main source of income. However not all rental properties are built equal. Let us take a quick look at what you need to know before you acquire a property for rental income purposes:
1. Property Taxes
These will be different all over the target area. You will have to visit the local municipal authority to find out all relevant tax information before you purchase a property and make it available for rent.
All neighborhoods attract a particular type of tenant. One that is specific only to that area alone. In this case, you will have to determine what type you want to entertain. For example, buying a property near a bunch of varsities will attract young students. Apart from that, some towns and municipalities have very high taxes to discourage certain types of tenants from living there. So make sure you have all the information before you make a decision.
- Schools and other educational institutions
It is always a very good idea to opt for a neighborhood where there are plenty of good schools nearby. Families need to pick and drop their kids to cool and not having one close by can adversely affect the overall value of the property.
3. Basic amenities
It is advisable to take a tour of the neighborhood so as to check out all of the restaurants, parks, gyms, public transportation links, movie theaters, and the like. If it is an attractive location for you and a place that you would love to live in, the odds are your prospective tenants will also feel the same way.
Your rental property should also be equipped with the necessary appliances. Your property should be equipped with modern flooring, new and functional cabinets and furniture. New HVAC supplies should also be installed for better adjustment of temperature.
This is a very big issue and it can severely decrease your rental income from the property. If you purchase a house in a crime-infested neighborhood, you will not be able to attract high-paying tenants at all.
5. The job market
A location that has steadily increased employment opportunities will almost certainly attract far more tenants than one where there are fewer such opportunities.
6. Check local listings
If you want to know about the growth potential of residential areas you might consider checking with the BLS ( U.S. Bureau of Labor Statistics).
7. Average rents
Since the core purpose of renting the property is to make it a reliable income stream for an extended period, you should do well to find out the average rent of the locality. Invest only when you determine that it’s adequate for your purposes.
8. Future development of the area
You should try to get information on all future developments in the locality. This will give you a great idea as to what is in and what is not. If multiple new developments are planned, the number of houses for rent will increase and thereby decrease the overall price of the whole area as per the law of supply and demand.
9. Number of vacancies
If there are too many vacant properties without tenants that means the neighborhood is losing its value and attraction. Conversely, very low vacancy rates denote the exact opposite. Talk to the realtors there, and find out for yourself, what the case is, prior to making a substantial investment
10. Collaborate with a property management company
You should consider working with and collaborating with a property management company like MDSquared. Such people and companies are the proven experts in their field and they will help you to not only look for but also maintain your rental property. Apart from that, they will also help you find new tenants.
If you have decided to augment your income with the help of a rental stream you should make it a point of doing your due diligence before investing your hard-earned money. Check for school and other educational institutions, as well as crime rates. You may also consider hiring the services of a property management company to help you out.