Alex, a friend of 18 years, came to me for some advice on how to find rental properties that will give him the best returns.
Alex represents a thousand and one people who are willing to invest in rental properties but do not know how to go about it.
As a result, at Digger, we have compiled six best steps on finding a suitable rental property in 2019.
Inquire with other investors
As a first-time real estate investor, you need to talk to real estate investors in the area where you want to set up your rental property.
These individuals will help you make the right investment decision by providing insight into the location the property is located.
Know your financial muscle
What you need to consider first is your financing. Is it going to be in terms of a mortgage loan or personal savings? If the answer is yes, then tailor your budget to the property, you want to invest in.
Know your tenant
The above budget will help you know your tenants. Too, it is essential to factor in the area where you want to develop your rental property.
If the neighborhood is full of working professionals, you would want to develop a studio apartment that will attract these individuals and give you good earnings.
Calculate your total earnings from the property
After listing your ideal renter, it is now time to estimate the rental earnings in the area. You do not want to put a higher rent on your property that will make customers shy away from renting in it.
First, you need to know the average rate in that location by talking to other investors in the neighborhood as well as property agents to help you come up with proper rent rates.
Estimate your expenses
You would want to ensure that your monthly earnings take care of some of your rental property’s expenses. Ensure that your revenues can cover up to 50 percent of the expenses that might arise from the mortgage loan or utilities such as garbage and water, taxes, insurance maintenance costs, HVAC system, and roof.
Invest in a neighborhood that has the potential for growth
By now, you know that the best property is the one that appreciates year in year out. Property that will not give the best returns over time is simply a liability.
Therefore, choose to develop property in a neighborhood that improves yearly.
Whereas it takes a lot of time to develop a property, the returns are significant! So, as an investor, take your time to research on a particular investment to ensure that you get it right from the onset.