By now you already realize that an investment property will open doors for earning more money in the future. Buying investment property is considered for both reasons – rental or future resale. Whatever your goals are, you should find a good property with the help of Buyers Agents.
Here are some factors that you can consider before buying a rental investment property:
Check the house’s condition
There is nothing wrong with considering a fixer-upper. This refers to properties that need money and time to make it appealing again. When you are eyeing a property, inspect it first together with an agent. This is so you can evaluate what you can do and the contractors. It will be prudent to get estimates especially if it needs major jobs. You need to make sure that the house is safe to move in if you are thinking of renting it out. Calculate things and if it is more than the expected amount, it is better to look for other properties instead.
Follow the 1% rule
Investors have this 1% rule when they set their goals in terms of income. The rule is that if you bought a house for $100,000, it should bring in $1,000 every month. The $1,000 is 1% of the purchased amount. There is an exception to this 1% rule – if the neighborhood is rapidly changing and the rent value will rise in a short span of time.
Know the property taxes
When you buy a property, you have to think about the property taxes. Remember that high taxes will only eat your profits leaving you little at the end of the month. Low taxes, on the other hand, will permit you to keep a large amount of rental income every month. Property taxes tend to be higher in metropolitan areas and lower in rural places. Even if you found a good house, higher taxes will make it a bad choice.
Determine the cost of insurance
Just like the property tax, a property insurance can also consume all your profits leaving you little at the end of the month. It is crucial that you decide the coverage of your insurance. Another thing to consider is the location itself. Is the location of the house prone to floods, hurricanes, earthquakes, tornadoes, and sinkholes? If it is, the cost of insurance will be higher and in that case, the house may not be worth it. As soon as you decided to get an insurance, the next thing to do is look for an insurance company. Do not forget to assess each one based on their insurance rates.
Prepare for unexpected costs
Your goal is to set a rental property to earn more money at the end of the day. However, there will be a time that the house needs money for unexpected expenses. It would take money to change the parts of the HVAC system or the plumbing system. Emergency money should always be available to ensure that the tenants are living comfortably and happily.
Knowing these things can make a difference.