Buying rental properties should be done in a systematic manner. The property you choose will have an effect on its marketability. Therefore, you just don’t select the property based on your personal preference. You are required to think out of the box and choose something that your target market could not resist. Doing this assures you of a good rental income every month.
It is important that you do your own careful analysis and research about the property you buy. However, you have to know what information to take; as well as, how to go about the whole process of selecting the property. In this article, you will be getting a walk-through on how you should go about the buying.
Where to begin looking
To buy the property, you have to start looking somewhere. This should not be hard to do. Here are the best sources for you to start your search:
a.) classified ads of your local or national newspaper
b.) Magazines about real estate
d.) Real Estate agents or Brokers
e.) For sale by owners
Factors to Consider
Once you have gone through your resources, you should have an idea on how to narrow down your choices. To do this, you need to analyze whether they are a good investment or not. Here is how:
1. Analyze the value of the property by researching economic activities (whether it is center for business or not and other stuff). You have to foresee what benefits your possible tenants could get within the area. In this way, you can identify good selling points for the property.
2. Determine the real estate market condition. Check the vacancy rate of the properties around. Learn the average rental rates for property similar to yours. This will give you an idea on how well rental properties work around the area.
3. Crunch up the figures and make a cash flow analysis. After seeing the property and learning the average rental rates, get a mental picture on how you will price the rent. Project it deduct it with the possible operational expenses (including your mortgage and interest rates).
Buying Affordable and Quality Properties
For a starting out business, you might want to capitalize on affordable properties that are of good quality and good condition. Therefore, inspection plays an important role in buying rental homes. You have to look at the property up-close before you sign any purchase contract.
However, you want something that is affordable. If you want to bring down the price, do it by asking for discounts. Here are some conditions that you can take advantage:
1. Sellers desperate to sell: These people are highly motivated individuals who want to dispose their property the soonest.
2. Look for repairable unwanted homes: Do you want super affordable homes? This is what you should get. Just make sure the properties are fixable so you can raise its value and make it more marketable.
3. Depressed market conditions with nearby places, which are center for economic activity: Need to say more?
After you have found the property you want, it should be easy to go through with the buying process. You would still have to go through closing day before you can start operation.