Looking for the right residential real estate investments is not a black-and-white process, as many factors are involved in selecting the perfect property. It’s especially critical that you understand these factors if you’re interested in drawing in capital from other investors. After all, these partners will ask you about these factors before contributing capital to your potential deal.
Here’s a glimpse at what you should look for in a property when embarking on a deal.
Consider the Neighborhood
Note that your chosen neighborhood will ultimately determine the type of tenant or buyer you will attract, as well as your rate of vacancy. For example, let’s say that you buy a property near a college. In this situation, you can expect to draw students to your property, which means you may have a hard time filling your vacancies during the summer months.
Look at the School System When Searching for a Residential Property Investment
If you are targeting families as part of your residential real estate investing strategy, it’s imperative that you consider the quality of the schools near your target property. If you can’t find highly-rated schools close by, you may want to avoid purchasing it, as this will negatively affect the investment’s value, and you might have trouble selling it to your target buyers.
Take a Peek at the Job Market Around the Property
If you want to attract the most tenants or buyers possible, it’s wise to choose a property in an area where employment opportunities are on an upswing. So, take a look at the local media to see if major companies are relocating to that area, for example. When companies move to cities, workers who are looking for places may very well flock to these areas, which is good for local landlords and sellers.
Keep an Eye Out for Future Development In the Area of Your Target Property
When you’re getting into residential real estate investing, before purchasing a property, try to check with the area’s planning department for information about a new development coming to the area. If you see construction in progress, or if construction will be taking place soon, this indicated a high-growth area. This is great when it comes to drawing more buyers and tenants to your home. Of course, keep in mind that new housing may end up competing with your property, and some new developments might hurt their surrounding properties’ prices.
Look out for Property Taxes in Your Target Area When Delving into Residential Real Estate Investing
Property taxes will probably vary across the area you are targeting for your residential property investment. For this reason, it’s important that you know how much your target property’s taxes are. High taxes aren’t necessarily bad if your property is in an area that draws long-term renters, for example. However, some not-so-attractive properties also come with high property taxes—a situation you don’t want.
The city’s auditor or assessor office is a good place to find out tax information for the properties you’re interested in purchasing. Alternatively, you could speak with property owners in the area. Also, try to find out if taxes will increase in the future. Towns that are facing financial crises might boost taxes to a level that is beyond what you’ll be able to charge a tenant or buyer.
Find out What the Local Crime Situation Is Before Engaging in Residential Real Estate Investing
As a general rule of thumb, tenants don’t want to live in or even near crime hot-spots. So, do your due diligence in this area before purchasing an investment property. For instance, check with the public library or local police for up-to-date crime statistics regarding your target neighborhood. Specifically, check how much petty criminal activity, serious criminal activity, and vandalism is taking place there. You could also ask how frequently police show up in the neighborhood.
Consider Local Amenities Before Embarking on Residential Real Estate Investing in an Area
Before you settle on an investment property, tour the property’s neighborhood to check out its public transportation, movie theaters, gyms, restaurants, and parks. All of these are amenities that attract tenants. Also, check with the area’s city hall, as it might offer promotional literature on the various public amenities in the vicinity.
Take a Peek at Vacancies in Your Target Investment Area
If you’re serious about residential real estate investing, it’s wise to also look at the quantity of vacancies and listings in your target investment area. If the neighborhood has a high listing number, this could indicate a normal seasonal cycle, or it could be a sign that the neighborhood is declining. Either way, you as a landlord will likely have to lower your rent to draw tenants. On the flip side, a low vacancy rate in an area means you can raise your rental rates.
Start Your Search for Residential Real Estate Investments Today!
Real estate is one of the best investments you can make, but your choice of property will either make you or break you in the business. The good news is that you don’t need to navigate residential real estate investing on your own.
I can guide you through the process of buying real estate assets to add to your portfolio. In addition, if you’re looking for a passive real estate investment opportunity, I’ve got you covered. Contact me to get started with property investing today!
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.
