While all properties are hopefully investment properties to some extent, actual investment properties require a different approach when buying. Rather than finding something that meets your investment and living needs, investment properties are all about the return once you sell. For that, you need to look at properties differently. Here are some handy tips to help you find an investment property that will appreciate in value and be a wise investment.
1. Vacancies and Rent
Since you’ll probably be renting out the property for most of the time, you’ll want a place that’s in a high-demand area for renters. This means looking at places that have low vacancy rates but steadily rising rental prices. This can be discovered in a number of ways, including simply going through rental listings. Look into how much you could rent your investment property for and do the math to see if it’s worth it. If it isn’t, look at future projections. If it’s still not worth it, look in a different area of the city.
2. Property Taxes
Property taxes vary from area to area, so it’s important to look into how much your taxes may cost you every year. It can actually mean the difference between profit and loss on your rental property. Be sure to factor the taxes into the rent, but it’s always better to see if the taxes are a deal breaker before buying the investment property.
3. The House Itself
Is it four bedrooms and ten miles from the university? Then it’s probably not a great rental property. Is it a fairly large space in a family-friendly neighbourhood that a young family could enjoy? Then you may have a better investment property on your hands. If you want to make money renting, you have to think about potential renters. Homes that are set up like student housing work well close to universities, while homes meant for family living work best in quiet neighbourhoods. Do the research on who is renting in the area and try to fit that demographic. If you don’t, your home could stay empty, and you could lose a lot of money.
4. The Neighbourhood
Schools, noise levels, access to parks and green-space, distance to transit, and proximity to services are all important when buying any kind of property, but especially investment property. Be sure to find something that appeals to renters, who typically have less disposable income than homeowners. That means living someplace where they can walk to most of the things they need, or take a bus. Think about lifestyle when looking at rental properties so you can pick someplace where potential renters can actually envision themselves living.
Investment properties need to have a special set of circumstances to be profitable and worth the investment. When looking for rental or investment property, be sure to keep an eye out for ideal rental properties with low taxes and plenty of amenities. It’s sure to help you make your investment back and turn a healthy profit.