Buying real estate for investment can provide a means of passive income if you choose the right property. Before you buy, it's important to make sure that the property you are investing in is right for your financial interests. With the help of a real estate agent and a bit of research, you can find a property that should yield a profit over time. Here are a few things to consider when looking for a rental investment property.
Average Rent Prices
Some neighborhoods have higher average rents than others, and you'll want to be sure you can charge enough rent to prospective tenants to cover your expenses. Take some time to research what the average rent in the area is for each type of real estate, including high-rise apartment buildings, multi-unit dwellings, and apartment complexes. Once you have determined the average rent in the area you are looking to buy in, you can then determine how much you can afford to spend on your real estate investment. Your real estate agent should be able to help you compile these figures before you begin looking at properties.
Local Property Taxes
Property taxes vary from state to state, and even from one county to the next. In some cases, areas with high property taxes may price you out of potential investment real estate properties. Many online real estate listings offer information about the expected tax charges for each property, which can help you to determine the affordability of any buildings you might be interested in. Remember that you'll need to pay for taxes on top of the cost of your real estate loan, property upkeep expenses, and incidental costs associated with owning a rental property.
Current Number Of Vacancies
When you begin looking at specific properties, ask about the current number of vacancies. Low occupancy rates may be an indicator of potential problems with the property, such as shoddy construction or an unsafe neighborhood. It's important to remember, however, that some areas might see low occupancy rates at certain times of the year. For example, buildings in college towns may have fewer renters in the summer when school is not in session. Take a look at the reasons why the property has low occupancy, and don't be afraid to talk to current tenants. You may find out some important details about why people are happy or unhappy with living in the building.
Your real estate agent can help you to determine the neighborhoods with the best amenities for prospective tenants, and he or she can also point you to properties that fit within your budget. With the right purchase, buying real estate can yield a regular profit to help expand your financial portfolio.