Breaking into the world of investment properties can be daunting, especially for first time investors. Any landlord-to-be is faced with the challenge of selecting a property out of a wide and potentially risky pool.
Searching for a property on your own gives you the ability to take your time and make an informed choice, but it can also be difficult to keep track of all the moving pieces that make up your investment.
An experienced a real estate agent will help you find the right home or building, and a property management firm can help you with all of your property management needs, so you don’t have to go it alone!
A company that is licensed and experienced in both real estate and property management, like Sterling Property Solutions, can be a real money and time saver. From the initial property search, to marketing the property and finding tenants, to rent collection and owner financial reports, a firm offering both services is a prudent choice.
There are many factors to keep in mind when evaluating a potential rental property. Below is a guide to some of the most important features to keep in mind when looking for a profitable investment property.
1. Which Westchester Neighborhood and Towns are Best for Investment Property?
The neighborhood in which you buy is perhaps the most obvious indicator of how successful your rental investment will be.
The types of tenants you attract are heavily dependent on the quality of the neighborhood and amenities available. For example, buying a property in a neighborhood with a coveted school district and access to parks will attract single families who are looking for a steady, long-term rental.
If you buy in a neighborhood closer to a college or university, your tenants may be students and you may face higher levels of vacancy and tenant turnover on a regular basis.
2. Investors – Consider Westchester Property Taxes
As an investor, when making your initial calculations, it is vital that you factor property taxes into your math. Property taxes are not uniform across an area, so knowing how much you can expect to pay in taxes will help you crunch the numbers.
Something else you’ll need to keep in mind is the possibility of property tax hikes in coming years. There is always the chance that a town may raise property taxes beyond the realm of what a landlord can charge in rent and still make a profit.
3. Is the Local Job Market Healthy and Growing?
The strength of the local job market and the rate of new renters typically goes hand in hand.
If employment opportunities are growing in a certain location, you can more or less assume that renters will be flocking to that area, and looking for housing.
If you know that a new business or corporation is moving to a certain area, you may want to invest in preparation for the influx of employees.
4. Potential Future Development Can Affect Westchester Property Values
Keeping track of future developments in the area is a sound idea, as these can affect the value of your property either positively or negatively over the years.
Some important things to find out are if there are any new developments that are coming or have been zoned into the area such as parking structures, malls, or new apartment buildings.
If there seems to be a lot of upcoming growth, this is probably a good area to invest in.
The flip side of this, however, is that other new housing developments could create competition with your rental property.
Depending on the quality of growth and the other factors in the area, that may be a risk worth taking!
5. Insurance and Expenses
Aside from taxes, one of the main expenses you’ll have to subtract from your rental income is insurance.
Every property requires different insurance, so it is good to know just how much you will need to pay. If an area is prone to natural disasters such as flooding, your insurance fees could be higher and may take too large of a dent from your rental income.
On the same note some properties, like condos, have additional expenses beyond normal maintenance, such as HOA fees or building improvements. If these extra expenses take too much out of the margin it might not be worth the investment.
6. Rents and Market Conditions
This last factor is fairly obvious, but the average rent and market conditions in the area are a must-know when choosing a rental property.
Rental income is the beating heart of your investment, so you must be certain that charging the average rent in the area will be enough to cover your expenses.
Meanwhile, it is best to work with a realtor and/or property manager who is hyper-local, and understands the real estate market conditions.
There is certainly a lot of information to contend with when investing in a rental property. It is important to be able to read the signs and spot the difference between a sound investment and a bad investment.
Keeping track of all the facts can be tricky, but renting and investing can be worry free when you employ the help of an experienced property manager.
Don’t get overwhelmed–get the support you need to make a decision and help you get the most out of your investment.