Are you ready to go down the path of becoming a landlord? Are you intrigued by the idea of being able to earn continuous income from your renter? Congratulations! This could be an exciting and life changing chapter for you. If you are ready to put in the time and effort, becoming a landlord can be a very rewarding experience – both professionally and financially.
But you can’t just snap your fingers and make it happen. In order to be successful in this endeavor, there are some important steps you need to follow. In this three-part series, we are going to cover some of the biggest issues you must address during this journey. So, let’s get to it! Today, we will discuss tips for finding the right investment property.
If you want to become a landlord, you must first have a property that people are going to want to rent. However, it is imperative to remember that buying an investment property is not the same as buying a home for yourself. While you may love certain quirks and charm in a house, the goal with an investment property is to appeal to as many people as possible. Additionally, you always need to keep the financial figures in mind. Remember, the ultimate goal is to make money as a landlord.
Thoroughly Research the Neighborhood
One of the main deciding factors for many renters is location, location, location. Many times, individuals choose to rent rather than buy because they cannot yet afford to buy a home in their desired area. By purchasing an investment property in a sought-after part of town, you have a much better chance of attracting potential tenants quickly.
Understand Average Rents in the Area
In order to figure out if a property will be profitable, you need to get a solid understanding of what people are paying for rent in your area. Ideally, you want to find a property that you can rent for more than the monthly mortgage payment. This will allow you to cover the mortgage, plus have a little extra income each month. Once you understand what people are willing to pay in a specific area, you will be better equipped to determine whether or not a property is right for you.
Identify Your Ideal Tenant
As you are looking at potential investment properties, it is also important to keep in mind the ideal tenant you would like to have. Are you targeting young professionals? Small families? College students? Knowing who you would like to live in your property will allow you to focus in on the details and amenities that would be important for this demographic. For example, young professionals might like to be in close proximity to work, while families may prefer to be closer to parks and other activities.
Know What You Will be Paying in Property Taxes
Property taxes are not a fun part of the process, but this detail is essential as well. If you choose an investment property in an area that has extremely high property taxes, you must take this into consideration when determining what to charge for rent, or you risk losing money instead of earning a profit.