Looking to Invest in Rental Property?
If you’re considering investing in rental property, now might be the best time in years. Currently, houses are cheap and mortgage interest rates are lower than they’ve been in years. Those two conditions make a prime market for anybody looking to invest in rental property. Rental property can be very profitable if you manage it correctly, but it can also be nightmare if you don’t. Before you run out and start looking at properties to buy here are some suggestions to consider. Are you planning on actively managing the property yourself or using a professional property management company? Property management companies take a percentage of the rental fee as payment for their services. Their fee varies depending on what type of services they offer; typically a management company will find and qualify renters, maintain the property, process payments and resolve legal issues with tenants. When considering using a management company or not be sure to consider how close you live to property, what services the management company offer, and the reputation of the company. Professional property managers can be lifesavers especially if you work another job full time or live out of town. Still, if you have the grittiness and skills to do it yourself, it may increase your profits though you will have a big job on your hands (everything breaks during the middle of the night right!). You will also need to consider what kind of neighborhood you want your rental property to be in. Research similar properties in potential areas and find out how much they rent for. A popular choice among investors is to buy houses near college campuses. If the property is close to a college campus you’ll notice there’s no shortage of interested renters but you may have to deal with other issues such as students leaving for the summer and the occasional party. College towns such as Boise, Idaho are a great place to look for rental property. Also you’ll want to invest in highly populated areas, instead of rural areas because highly populated areas tend to fetch higher rent prices and more people looking to rent a home. Property in the city may cost more, but it will be a better investment long-term. Consider your financials. Just because you can afford a nicer rental property doesn’t assure that it will be a better investment. Typically, renters are quite price conscious and willing to live in a lower quality home if it’s within their budget. Just because you would rather have top-of-the-line appliances and building materials doesn’t mean your potential renters would. It’s something you should consider but not base your entire decision on. Remember that somebody else will be living in the home and not yourself. You will need to find out how much property taxes and insurance for the property will be–you want to be do all your homework. Taxes are not standard across the board and if you find a property you’re interested in, consult the local town’s assessment office who will be able to give you an accurate tax estimate. Deduct tax and insurance expenses from your returns to get a better estimate of how much you’ll be making from your rental. With favorable housing prices right now just might be the perfect time to look at investing in rental property. Some of the best places in the country to buy rentals include Las Vegas, Detroit, Orlando, Bakersfield, Boulder and Boise (CNN Money). Team up with a solid, expert realtor from boulderhomesource.com and make some money with rentors today!
Boulder Colorado Real Estate Blog