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Buying rental properties can be a great way to build your
wealth. However, as in most real estate investment, it is
sometimes difficult to know if you've found a good deal -
especially the first time. Here are some things to look for
to be sure that rental is a great investment.
1. Location. If traffic is heavier, rentals are easier to
rent. A sign will often pull more response than an ad in the
paper. If it is a nice locale, it will usually rent faster.
This is also true of places close to amenities.
2. Numbers Run the numbers. Get every last expense figured
into your calculations, and be sure that you will have positive
cash flow from the start.
3. High home prices Look in towns with high home prices,
as this creates rental demand. What do people do when they
can't afford to buy? They rent.
4. Low maintenance buildings Avoid cedar-shake roofs, and
wood-sided buildings. Look beyond current expenses to how
much maintenance the building will need. Low maintenance means
less headaches and more profits.
5. Good rental history Ask to see the rental history. Note
how long residents are staying on average, and how well they
pay on time.
6. Below market rents. Buying rental properties with below-market
rents means you get to raise rents. Raising rents means you imediately raise the value, because rental property values
are based on income.
7. Complies with zoning and fire codes Have it inspected,
and ask local officials if there are any problems.
8. Less than 20 years old This is somewhat arbitrary, but
if you limit your search to newer buildings, you will be less
likely to have building code and maintenance problems.
9.Owner/manager that is out of state These properties are
often the best deals, because it is tough to manage a property
from far away. An out of state seller is often more concerned
with a quick sale than a high price.
10. Neighborhood is stable or improving Stable is okay,
but if you can buy in a neighborhood that is improving, you'll
rent the units more easily, and therefore get automatic appreciation
in value with time.
About the author:
Steve Gillman has invested in real estate for years. See a
photo of a beautiful house he and his wife bought for $17,500
on his home page, or go straight to the section on real estate
investing: http://www.HousesUnderFiftyThousand.com/investing-in-real-estate.html
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There
are many real estate market forecasts and predictions available
Buying
rental properties can be a great way to build your wealth.
There are
many good selling tips that can help you
to sell your property.
