With interest rates still low and properties in some markets available at reduced prices, this may be an ideal time to consider purchasing an income property. Investment properties can prove to be very beneficial especially if you've don careful research and planning. When it comes to selecting the right property, you'll need to consider several factors.
MARKET TIMING
Even if buying an income property is not part of your immediate investment plan, you should be aware of market trends so that you understand where the market is expected to go. Then, look for signs of a regional market upswing. Positive changes in the market could signal prime purchase and financing opportunities.
LOCATION, LOCATION, LOCATION
The most important rule for choosing an income property is the same as for choosing a retail operation: the best locations create the greatest exposure and generate the most sustainable demand. Preferred houses and condo units are in communities with reliable or improving infrastructure, rising employment or other commercial or institutional development.
NEIGHBORHOOD STATUS
Carefully consider the location of your income property. You should determine transportation access and nearby services, and also be satisfied that the local community will not experience setbacks that might lower neighborhood living standards. Such setbacks could include absent owners or indifferent tenants. Similarly, as an owner, you will have a responsibility to uphold your commitment to your chosen neighborhood.
UNIQUE FEATURES
Being selective about your property purchase might also allow you to be selective about your tenants. Ideally, your property will attract those who are willing to pay a little more rent for the features you offer, and are likely to want to stay longer. So look for features that would be considered desirable and unique from a tenant's perspective. Advantages could include consumer conveniences, attractive architecture, tasteful decor, security parking, amenities, and access to schools, shopping, sports, leisure and entertainment activities.
PROPERTY CONDITION
Properties in need of repair need not be ignored, as long as the repairs are measurable, affordable and likely to improve the property's desirability and longterm value. The most promising properties have a solid, protected foundation and sound superstructure, as well as minimal requirements for utility upgrades. In such cases, you should be able to easily afford to invest in aesthetics that make your rental property more attractive and competitive.
CAREFUL MANAGEMENT
Successful property management requires a professional approach that entails careful planning and accurate bookkeeping. Budgets need to be established and should include contingency funds for unexpected repairs and upgrades, and consideration for interrupted income. If you're uncertain about budget planning and bookkeeping, building repairs and maintenance or tenant/landlord legalities, you might consider hiring a trusted property management firm, or consulting with appropriate experts.
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