Are you looking to invest in a residential rental property? As much as the profit prospects of the investment are quite high. But a little diligence and research is appreciated from the owners before making the purchase.
Real estate market is a tough to crack; hence the buyers and sellers are advised to come prepared for the dealing or your one mistake can wipe-out your returns.
Here are the 10 most significant features to consider while buying a residential rental property.
Top 10 features to consider when searching for a profitable residential rental property
1. Study the neighborhood
Do not neglect the neighborhood in which you plan to buy your rental property. This is because you get to know a great deal about the types of tenants acquiring your property and your property’s vacancy rate.
For instance, if you buy a property near a school or a university, then there are very bright chances that college students will take over as potential tenants and you may have to deal with vacancies every year.
2. Calculate property taxes
Property taxes tend to differ widely across your target area. So, you must be cognizant of how much property tax you will be paying to them. Although high property taxes are not a bad thing in a goof neighborhood which attracts long-term tenants. But some second-rate places too charge high taxes, which is not a profitable decision to make.
You can discuss the taxes with your property management company or he municipality’s assessment officer or you can even talk to other homeowners in the society.
3. Schools in nearby location
The value of properties which have reputed schools in their nighborhood is quite high. Hence you must consider whether or not the society has a good school in the localities.
Having a good school in nearby location ups the value of any residential property, both in term of monthly rent and also when you plan to sell it in future for excellent returns.
4. Safety arrangements of the area
In today’s world or even otherwise safety is the priority for almost all. Just check the arrangements made by the society to fix the crimes. The very basic is to have a CCTV camera installed and a guard to monitor the premises.
Apart from this also check with the local police for the crime statistics in the locality. Also check the rates for vandalism, serious crimes, and minor crimes, and note if criminal activity is decreasing or increasing over time.
5. Job Place
Locations which have increasing employment opportunities are tend to attract more tenants. It is an excellent idea to invest in a property which is in a location not far from companies’ hub location.
Having said that, it is also important to keep in mind that while a good business increases a property’s value, a not-so-good business in locality may have the negative impact and bring down the property prices.
6. General amenities
Take a tour of the neighborhood and check out the local markets, kid’s parks, eateries, gyms, public transportation and all the other benefits that attract renters.
7. Future developments and projects
The local municipal department has all the information about new ongoing and projected developments in the area.
If you see major constructions in the vicinity of your prospect rental property, then it is most likely a good growth area. Pay attention to any new developments that could cause a drop in the price of surrounding properties.
8. Quantity of listings and vacancies
If an area has an oddly high number of listings, then it signals two things – either it is a routine seasonal cycle or a locality is decaying.
As a real estate buyer your job is to find out which of the two signals is rights. In either scenario, high vacancy compels the landlords to lower rents so as to attract tenants. Whereas, lower vacancy lets landlords to increase rental prices.
9. Setting the right rent
Rental income is what you look for the most which buying a residential rental property. Hence, you need to enquire about the average rent rate in your prospect area.
Just ensure that any property you consider to buy returns you enough to take care of your mortgage payment, taxes, and other regular expenses. Research the locality thoroughly and calculate its position in the coming years.
10. Natural Disasters
The returns you get from your rental property are not inclusive of the insurance you buy for your home. Hence be very careful in choosing the area to buy your rental property.
Do not invest in an area prone to flooding or any other natural disaster to save your rental income by heaps.
The Bottom Line
You may find a lot of properties for investment in the city of your choice. But before finalizing your rental property you have to do your due diligence and a lot of footwork to get the max returns on your rental property.
This may seem quite overwhelming, but you can always use the help of professional property managers in your area.
If you are looking to buy a property in Delhi NCR then our property management services in Delhi NCR will be very helpful in the entire process.
Get in touch now!