Do you know the 1% rule?
This rule states that when you buy a house as an investment property, you need the rent to be at least 1% of the acquisition price. This includes the price for the home, renovations, and any other costs you have to put in upfront.
But what else should you know about rental property investments? How do you evaluate a property to make sure it is right for you?
Read on to learn more about income properties and how to determine which is best for your needs!
Research the Location
When it comes to investing in a real estate property, one of the most important things you need to do is research the location.
The location is what determines the real estate market, how much rent you can get from a place, and how many people will be likely to contact you to rent (either long-term or short-term).
Researching the location will also give you a better idea about trends in the area, more knowledge about the neighborhoods, and important criteria such as schools and public transportation.
Figure Out Rental Income Potential
The reason that you are renting out a property is most likely because you want to make an income off of it.
To figure out how much you could make, you need to research the local rent rates for properties that are comparable to what you would want (size, location, age, etc.).
Based on that, you can determine how much rent you can expect to charge.
Know Your Operating Costs
As great as it is to be able to calculate how much you could make from rent on your rental property investments, you cannot leave out the fact that you will have operating costs. You need to factor in your mortgage payments, insurance, property taxes, maintenance, any unexpected repairs, and property management fees.
These are all going to take a fraction of the rent away from your pockets, so knowing what the fees are versus the rent will help you determine your actual income.
Always Think About Market Conditions
The market is always changing. That means that interest rates, supply and demand, and economic trends are always changing.
Depending on the market, you may be looking at excitement right now, but long-term disappointment. Or, you could be getting in on a rental property investment that seems just okay at the moment but will skyrocket in the future.
Keeping market conditions in mind will help you make the best decision.
Managing Income Properties
Whether you just have one income property or you have multiple, managing income properties is not an easy feat. There is a lot that goes into each one—it can be very time-consuming.
That's where property managers can step in to help you do it all.
At Blue Ribbon Property Managers in College Station, Texas, we are ready to help you make the most of your investment property.