If you are looking for a long-term way of making money in today's economy, real estate investing may be a great way to go about it. It is often a safe and profitable way to make money for the long-term. In many cases, you are safe from inflation, you will see a decent cash flow, and you will own your own asset that constantly remains in high demand. The key, though, is to ensure that you find the ideal investment property. So here are five things to look for:
#1: The Right Location
When looking at properties, you need to first consider their location, as this is going to weigh heavily on your frequency of vacancies. While anything could cause a tenant to move, such as job relocation, there are some situations that you can predict. For example, if you were to invest in a property near a college, you can anticipate that your property will be leased nine to ten months out of the year and be vacant throughout the summer months when students usually head home. In addition, you can expect a higher turnover in neighborhoods that have a lower income.
#2: Single Family Homes
More often than not, your target tenant is going to be a small family, or at the very least a couple. In other words, you should avoid commercial properties when getting started. For one, the economy tends to hit businesses pretty hard. People always need a place to live, but they don't necessarily need a commercial space for their business.
#3: Schools
With #2 in mind, make sure that you scope out the schools in the area of any property that you are looking at. Tenants (with or without kids) will likely want to be near a school; however, it shouldn't be just any school – it needs to be a school with good ratings.
#4: Crime Rates
If the crime in a neighborhood is bad, your house is not going to stay rented for very long at a time. Plus, it could end up getting your home's property value lowered. Don't rely on information that the seller is giving you. Instead, head on down to the police department and see what their experience and statistics say, as this is the most reliable source of information.
#5: Property Taxes
This one is for your own benefit rather than the tenants'. Before purchasing a property, you need to know how much you will be paying each year on property taxes. After all, this is money that is coming out of your overall revenue from the property, so you will need to make sure that you can afford the taxes for a low-crime, high-income neighborhood. For this information, you can go to the city's assessment office.
Once you are equipped with all the right information and you have narrowed your search down to a handful of properties, you can find a realtor and start looking at the properties in more detail. Contact a company like The Home Town Team at RE/MAX Integrity to get started.
