Signs of a Good Investment Property: 5 Critical Things to Consider When Investing in Real Estate
Congratulations on deciding that you want to invest in real estate. He made a wise choice and chose something that everyone should have, so even with temporary economic setbacks, your property will appreciate in value over time. Now is the time to choose your property. Here are five things to look for in a good investment property.
1. A willing seller. If you come across a property that looks like a good deal but is priced a bit high for the market, you will certainly make the seller an offer. His offer will probably be below the asking price, but if the seller doesn’t change his price at all, he might consider moving to another property. This is especially true if the house has been on the market for a while.
2. A good location. Homes in up-and-coming areas are ideal for entry. Hot markets like Toronto or San Francisco can be frustrating due to competition due to low inventory and extremely high demand. The tough parts of town, even if you have a nice place, just aren’t areas where people will willingly move unless the rents are low enough, and then you won’t be able to recoup your investment very well. Good neighborhoods in other areas that are seeing an upturn are much more satisfying. You will be better able to invest in a property to fix it up and resell it or rent it and you will attract a better clientele.
3. A house in fairly good condition. You don’t want to spend a lot on a property that is in poor condition or a house that will require a lot of work to update, or worse. Homes that are in poor shape are not good investments unless you can get the house for a very low price and are willing to invest in the necessary work. If you go this route, you may want to rent it out for a while to earn some income until home prices reach a level where you’re ready to sell.
4. Reasonable property taxes. If you are renting the house or multi-unit building you have purchased, remember that you will be responsible for property taxes. It’s quite easy to do your research and find out how much this will cost you, and also deduct it from your investment. For example, on the east side of the Willamette River, property taxes in the city of Salem, Oregon are approximately $1,800 per year. But cross the river — and the county line — and you can add another thousand dollars a year to your property tax bill.
5. Good schools. If you want to have tenants with children, you’ll want to locate your rental property near good schools. Major real estate websites will list the schools that children living in that area will attend, along with grades from those schools. Schools that are not performing well will be harder for families to attract, and it will be harder to get the rent you want.
If you have more questions about what constitutes a good rental property, check out some of the other articles we have here, or talk to a local real estate expert who can help you find good homes in your area. Happy searching!