Buying income properties can indeed be a complicated business. There is a lot to know before choosing a potential Little Elm single-family rental home, everything is not as clear and apparent to first-time investors. While the price of the property is a key piece of information to have, it is not the most important one. Basically, the top four features to watch for in a great income property are property taxes, rental rates, future development, and vacancies. By doing a little research and collecting as much data as you can in these four areas, you can better narrow your property search to get the most profitable options.
Property Taxes
The cost of an income property begins with the sales price but certainly doesn’t end there. As expert investors know very well by heart, ongoing expenses such as property taxes could have a major influence on your rental home’s long-term profitability. Property taxes vary widely from town to town, and sometimes even neighborhood to neighborhood. It is relevant to attain accurate property tax numbers for the exact property you want to buy before making your offer. Most municipalities have an assessment office with tax information on file, with an increasingly large number of towns now offering this information online. You have to also check local news carefully for any hints of a property tax increase in the near future. Despite the fact that high property taxes are not always a bad thing, definitely in a locality that is identified to draw-in long-duration tenants, they could additionally be a sign of a town with problems.
Rental Rates
Knowing how property taxes will affect your investment is an important element in making a decision on your next property, and so is an in-depth knowledge of rental rates in your area. A thorough marketing analysis of the location that you target to invest in could actually help you to know what the average rental rate is. This number, then, can surely help you assess whether your expected rate will cover your costs, including the mortgage payment, taxes, maintenance, and everything else. In regards to property taxes, you’ll need to undertake and gauge where rental rates in the neighborhood may be headed in the very near future. Looking at the recent past may help, as will staying on top of local development projects or shifts in demographics.
Future Development
As you take your data on property taxes and rental rates, don’t disdain to research any plans for future development in the area. Generally, the municipal planning department in your area will have helpful information on any new zoning and development plans. It is even a perfect idea to look around the neighborhood and nearby areas for signs of construction. If a lot of building is underway, that may be a sign of an area experiencing strong growth. It’s moreover significant to check various new housing developments, which could potentially lower property values for those existing homes within the vicinity. New housing could also wind up being your competition, now having more and more investors and even builders putting brand new homes on the rental market.
Vacancies
Conclusively, the fourth important factor to use in working out which investment properties to buy is the number of listings and vacancies in your location. A locality with a high number of rental homes is not necessarily a sign of trouble, as long as the number of vacancies in that same area is relatively low. In situations where you are finding unusually high numbers of unrented properties, however, that would be a mark of a neighborhood in decline. The more vacancies there are, the lower rents will go as landlords compete for tenants. You can turn out losing money if your rental rate dips below your ongoing expenses.
In Conclusion
While doing research on every potential income property is a lot of work, Real Property Management Focus can help lighten your load. We offer free rental property analyses for investors, which can help you more easily identify whether the income property you want to buy is a profitable option. Contact us online or call us at 469-820-0088 to learn more!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
