Starting the process of becoming a landlord can be a daunting task without enough research. If you do not crunch the numbers correctly prior to making your first home purchase, you could be left in a tight financial situation. Owning rental property can be a risky situation if not done correctly, as the property may sit vacant more than expected, or you find out the area around the property is not what you once thought it was. As with any investment, proper research is key. At Brass, we are here to help teach you important things to look out for as you begin the journey into owning your first rental property!
Learn About the School District
Even though you are purchasing this home to be a rental property, there will eventually come a point where you decide to sell. Although the schools will most likely not affect your monthly cash flow, a poor school district will be bad for the property value when you do decide to sell. Additionally, a good school district tends to lead to many parks and community spaces around the district as well, which can cause your property value to skyrocket.
Study the Job Market and Local Companies
A healthy job market means that a steady flow of people will always be in the area, whether they are looking to rent or own. Also, make sure to read local business news for the area; if a major corporation is considering a move to the city of your property, that can spell big things for your investment.
Watch for Future Development
Growth of an area is the best thing possible for your investment. If you are observing a potential property and you notice there are new apartments, shopping centers, business districts, etc. under construction, than the neighborhood is growing and becomes more attractive to buyers and renters.
Know the Average Rent
Knowing what the average rent rate in the city is will go a long way towards your calculations to determine whether a property can generate a positive cash flow for you. If the costs of the property will be more than the average rental in the area, you need to look elsewhere, as this is not a good investment.
Can You Handle Seasonal Fluctuations?
Not every investment opportunity is the same. Some people prefer steady rental income throughout the course of the year, while other prefer to own rentals in seasonal areas (Beach towns, Mountains, etc.). Before determining what type of rental you want, you need to figure out whether you can afford seasonal fluctuations or not. A beach rental in the summertime could bring you in an exorbitant amount of income, but most likely, this is all the income you will get for the year from the property. Do you prefer that or a steady source? That is up to you to decide.
There is no way to teach every aspect of what it is like to be a landlord before you begin the process. It will be a learning experience, and you will go through some trials and tribulations. However, by planning out the important financial aspects of the investment, you can get a general idea of what to expect in the future from your property. No two markets and no two properties are the same, which is why it is impossible to know every aspect of what you will encounter in this investment. If you decide that owning a rental property is for you, you will most likely need a rental loan in order to secure the property. At Brass Financial Group, borrowing is quick and convenient. With no income verification, we can close loans in under thirty days! Contact us at (609) 800-FUND to begin the process, or to ask any questions you may have. Owning a rental property is an exciting time, and we want to make the process as easy as possible for you.