Your successful venture with buying investment property for rental purposes can depend largely on how good a job you do of selecting the best properties. Factors such as property value, maintenance expenses, and vacancy rates can influence your profits. To select the best possible rental properties, make sure that you adequately research properties before deciding to buy one.
Active or Passive Management
One of the most basic decisions that should influence where you look for investment properties is the question of whether you plan to manage the property on your own or hire an individual or property management firm to handle the property management duties for you. If you plan to manage the property yourself, you should possess at least basic repair skills such as fixing a leaky faucet, as any necessary repairs that you can handle yourself will save you considerable money versus paying a professional to do the work. If you’re going to manage the property on your own, limit your search for properties to locations fairly near where you live. You don’t want to have to drive an hour and a half when a tenant calls late at night with a maintenance emergency. On the other hand, if you’re hiring out the property management, then you can consider properties over a much larger area. Just make sure you check out the property management company and determine that you can trust it to take care of your properties and tenants.
Elements That Affect Property Values and Attract Good Tenants
The best rental properties are in desirable areas or neighbourhoods. Owning such properties makes it easier to attract and retain tenants, reduces extended vacancies and other potential problems, and lets you command higher rental fees. Carefully research neighbourhoods and the features that make them more attractive to tenants.
- Properties near good schools naturally attract families with children. These families are generally more stable tenants than younger singles.
- The employment market is an important consideration. Check out how many major employers are in or near the neighbourhood.
- Neighbourhood amenities such as shopping, parks, and restaurants also help attract tenants and avoid prolonged vacancies.
Don’t get ahead of yourself in the property rental business. Start small, with properties that usually rent easily, such as single-family homes or a duplex. Single-family homes tend to attract tenants that lease for longer terms, cutting down on times of vacancy and the expense of having to advertise for new tenants. You don’t want to get overextended on expenses before you start recouping your investment in the form of rent payments; it’s usually worth it to acquire a property that’s already in good condition instead of going for a fixer-upper that may cost you more in the long run. Learning the business of property investing takes time and experience. Start small and start carefully to give yourself the best chance of quick profitability and ultimate success.