Signs a Property Is Worth Buying and Renting Out

Investing in a property as your first home takes a lot of consideration, but if you would like to buy a property to later turn it to be rented out then that is another story. There are a couple of things that you would have to consider when buying a property that can be a good investment and will return profit for renting out. Becoming a landlord seems to be such a great idea since it is an opportunity for passive income. Here are just some of the points that you need to take note of:

Rent should cover your cost upfront

If you calculate costs for renovation and it turned out to be more than what you are supposed to be getting in a couple of months for the rent, then you should think about buying it. Think about the mortgage payments, taxes and insurance. Rule of thumb is you should consider the 2% rule which holds that your monthly rent should be at least 2% of the total purchase price of a property. Make sure that you check everything before you turn your down payment for the said property.

Days on the Market

Just like with any other property, you should also check on how long it has been on the market for sale. It is best that you also check other rental properties in the area to make sure that they are occupied. Otherwise, it is a bad idea to invest in an area where it is not “rent-friendly.”

Gourmet stores within the vicinity

Another great feature for an attractive neighborhood is that it has gourmet stores nearby. The reason being is that marketing people for these establishments make their research first and they are able to identify their target market.  The same also applies for properties within the area of elementary schools, which means that most people who will be living there are families who have plans of settling in the area long-term.

Previous tenants’ history

If the property you are considering buying already has tenants whom you will be inheriting, it pays to check their background. Don’t just rely on the fact that they always pay on time. Check their credit history and do a credit check as well to see if they have enough income to sustain their living for that property. If it turns that the current tenant living there does not have such a great credit history, turn this into an opportunity to ask for a lower price for the property, stressing on the fact that there is a possibility for a hassle due to eviction.

If you have found a property that you think is worth buying, don’t hesitate to contact a real estate professional to assist you with your home buying needs.

Source: http://www.realtor.com/advice/buy/signs-good-investment-property/