Are you looking to purchase a residential rental property to boost your investment portfolio? Investing in property can be an exciting and rewarding venture if you make smart decisions. But income and additional benefits aside, buying an investment property can still seem daunting to first-time investors.
Real estate is a tough business to crack into, and the field is littered with landmines that can obliterate your returns. This is why it’s important to conduct thorough research before you dive in to ensure you’re on top of all of the benefits of buying an investment property.
With this in mind, here are the top 5 features to consider when shopping for the perfect investment property that should hopefully help you make your search more efficient.
1. Location
The neighbourhood or area in which you buy will influence the types of tenants you attract. If you buy near a university, for example, chances are that students will dominate your pool of prospective tenants, and you might struggle to fill vacancies throughout the summer.
2. Property Taxes
Property tax is an expense that can vary drastically across your target area. While high property taxes aren’t always a bad thing - for instance, in an affluent neighbourhood that attracts long-term tenants - but there will always be unappealing areas that also have high tax rates. Be sure to find out whether property tax increases are likely in the near future, as this could impact your decision to purchase in that area.
3. Average Rent
When it comes to buying an investment property, rental income will become your bread and butter, so it’s important to be clued up on the area’s average rent prices. Ensure that any property you consider can provide enough rental income to cover your mortgage payment, taxes and other expenses.
Research the area well enough to gauge where it could be heading in the next five or so years. If you can afford to purchase there now, but property tax is expected to rise, an affordable property today could spell bankruptcy later down the line.
4. Future Development
The local planning department will have information on future developments or plans that have been zoned for a specific area. Additionally, if there is a lot of construction underway near to the property you’re considering, this is a pretty reliable indication of growth. Keep an eye out for any new developments that could hurt the price of surrounding properties.
5. Amenities
Tour the neighbourhood of your prospective property: check out the local parks, shops, public transportation links, restaurants, gyms and other perks that attract renters to an area. This should give you a good idea of whether the location of your investment property will be appealing to certain types of prospective tenants.
Seek Advice From a Reputable Property Investment Agency
If you would like some professional advice on making smart choices when buying an investment property, Lev Properties can help. We are a property investment agency based in Liverpool, specialising in property management, rental property management and property development. From start to finish, we provide a fully tailored service for Liverpudlian property investors - whether you’re new to the investment world or have a few properties under your belt. For more information, please get in touch.