Now that the real estate market is on the upswing, some homeowners are considering buying an additional property to take advantage of remarkably low housing prices coupled with low interest rates.
Is It Wise to Invest in a Rental Property?
If you’ve ever dabbled with the idea of becoming a real estate investor, now may be the prime time to take the plunge.
According to expert real estate agents, this is the first time in years where the perfect storm has occurred: In many areas of the country, housing prices are lower than ever, and interest rates are equally as low. This means that it’s inexpensive to borrow and buy, creating the perfect opportunity for newbie and experienced investors alike to purchase a new property.
4 Steps to Take Before Buying a Rental Property
But not so fast… Before you decide to invest in a second property, it’s important to use the following criteria to make sure you are buying a good home that will serve as a solid investment:
1. Begin with the right real estate agent. Working with the right realtor can make or break your experience in buying an investment property. If you are searching for a home in a specific area, it is best if the realtor is well-acquainted with the neighborhood and region to find the right home to meet your needs. If you are looking for a rental property in another city or state, work with a local realtor who knows what they are doing; a local realtor can also recommend an Austin insurance agent for affordable homeowner’s insurance when you buy.
2. Research the quality of the neighborhood. The area where you buy can affect the current value of a property, as well as how much it appreciates or depreciates in the future. If you plan on renting your property to tenants, the local neighborhood will also determine how easy it is to find a new renter after a lease ends. First time property owners may do best in a highly populated area with regular rental turnover, such as near a university or medical center.
3. Check out the local school system. If you are renting out a house with several bedrooms, then you may want to count on the fact that a tenant is likely to have children and will be searching for a good school district. Before signing on the dotted line to buy a rental home, make sure that you are satisfied with the ratings of the elementary, middle, and high schools in the area.
4. Find out more about local crime statistics. If you buy a home in a high-crime area, you are setting yourself up for disaster in the future. You may have to deal with tenant complaints about regular criminal activity. When researching crime statistics for a neighborhood, it’s best to check with public records or the local police station. Specifically, find out more information about petty crimes, serious crimes, and vandalism rates. In addition, make sure that you have a solid homeowner’s insurance policy in place that will protect you as the landlord, as well as your tenants in the case of theft or vandalism to your property.