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When dealing with the real estate industry, one of the first types of real estate that you will come across are rental properties. Rental properties are real estate property investments that owners put up for rent instead of selling it. Because of its price point and abundance, it is a popular choice for young professionals. You must try it because it provides a good income stream for you from rental fees that also help with the amortization at the onset, especially when you are just starting out. Owning rental properties is actually considered one of the best ways to build wealth over time.
Your first rental property will usually determine your success or failure as an investor. Whether you are a young professional looking for rental properties or an investor who wants to learn how to get started on investing in real estate, this is the perfect guide with a few tips for you to help you analyze real estate rental properties.
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It doesn’t matter if you are investing in a rental property or a property that is for sale. In any kind of real estate investment, location is everything. Even though there are many factors that affect how attractive it will be, location is one of the most important thing to consider.
The rental income will be directly affected by the location of your property. For example, if it is in a tourist area, your rental fees are poised to be significantly higher, as well as its occupancy rate. On the other hand, if your rental property is in the suburbs, the rental fees will be lower.
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As a beginner, you will be overwhelmed with the wide variety of properties to choose from. This can range from apartments to townhouses, to condominiums, luxury homes, and vacation homes.
Every type of rental property has its respective advantages and disadvantages depending on your goal. Using comparative analysis, you can get an idea about which type of property you like best.
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Some criteria to take into account when doing comparative analysis are:
- Size (i.e., floor area and lot area)
- Age of property
- Features (i.e., pool, garden, garage, foyer, and so on)
- Cost-benefit analysis
- Occupancy and vacancy rates
- Pros and Cons
- Target tenants
Real Estate Market
You also have to check how the real estate market is doing in that particular area. This means that you have to make a research about its market price, to know if you are getting a good deal. You might consider using neighborhood resources, like this one in Minneapolis from ABODO, for example, to understand your market, Further, you can also check how the economy, job growth, and population growth is doing in that location. These are factors that will significantly affect the rental fees and occupancy rates of your rental property.
Safety and Security
For anyone who will rent your property, safety and security is a priority. For this reason, you must make sure that it has safety measures in place and is located in a relatively safe area. You also have to make sure that your home has an insurance or protection plan in case an unfortunate event happens.
Some tips on how to do this are the following:
- Ask the neighborhood regarding safety
- Check the area’s crime rates
- Install alarm systems
- Check if there are guards around the area (if you are getting a unit in a condominium or apartment)
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First impressions count a lot. The first thing that tenants will spot is the look of your rental property. How it looks like plays an essential role in its performance and will impact both rental income and occupancy rates.
Make sure that the walls are painted well and fixtures are well-maintained before investing. Keep its interiors simple in order to give your tenants a leeway in putting their own spin to it.
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Rental properties close to the airport, highway, or train tracks tend to disturb tenants because of noise pollution. As a result, the value of your home can also be compromised. No one wants to rent a property where it is noisy, so you should avoid getting one near this areas.
Rental property analysis is very important since it helps you determine the value of your investment property. Knowing the value is essential because you would want to invest in property that will give you returns. With this guide in analyzing the rental property, you can now craft your own strategy and have a success.
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