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How to Know if You’re Buying a Good Rental Property

Rexburg House for SaleBuying a Rexburg rental property can be a perfect investment. However, in order to be sure that the property you want will provide the returns you’re keen on receiving, it’s relevant to know what to look for. Some single-family houses make better rental properties than others. You would be better off looking for specific classifications when assessing investment properties to easily distinguish those with profit potential from those that will lose money. If you find a property with these qualities, you can be absolutely sure that you have a solid prospect for your next investment.

One of the most important qualities of a good rental property is the market in which it is located. Typically, the most profitable rental homes are those located in growing and thriving real estate markets, where rents are going up, and the demand for rental houses is strong. The location of the property will also determine things like your tenant pool and rental strategy.

Some other solid indicators to look out for include a strong local job market, low crime rates, and future development plans. You also will have to know as much as you can about nearby amenities, public transportation, and aspects of the property that might be trendy or in-demand. To maximize the return on your investment, it’s vital to have a precise understanding of each aspect of the local rental market before you get it.

Highly related to property location is the price. Not only do you need to find a rental property that is within your budget, but it should also be priced at or below market rate for the area. In working out the property price, be sure to factor in things like closing costs, repairs, and insurance. A truly affordable rental property is one that you can buy while still having some cash reserves leftover.

With that said, the lowest priced property may not be the best value. If the property is priced well below comparable properties in the area, it’s worth looking closely into it to find out why. It’s more likely that you may have just spotted a perfect steal that provides instant equity from day one.

One other necessary number you’ll need to look at when selecting a rental property is cash flow. A good prospective rental property will consistently present a solid positive cash flow. This means that you should be earning a profit more than your property expenses every month. To determine whether a property will provide positive cash flow, you’ll actually have to do a rental property analysis. Just be sure to include all property-related expenses, especially those that are almost always neglected. If, after you’ve estimated the numbers, you are relatively confident that the property will have a positive cash flow, you might have a really good rental property.

Part of calculating your numbers will necessarily include the cost of any repairs and maintenance. All single-family houses need regularly scheduled maintenance and repairs. But be aware that various scheming sellers may try to hide major issues, ones that would be expensive or time-consuming to repair. If you live at a distance from your rental property or don’t have experience with home remodeling and repair, make certain to include property management costs in your calculation.

But, really, even though it may seem tempting to try and manage your own investment property, especially if it is your first one, generally, it is more efficient and cost-effective to hire a professional property management company, such as Real Property Management Southeast Idaho, to do it for you. Just bear in mind to work on some research and find out how much the monthly fees and other costs will be so that you can include them in your budget.

By having these specifications to assess each property, you can more swiftly as well as quite clearly and easily distinguish which properties would make a good investment.

Have you found your next rental home but need someone to help you manage it? Real Property Management Southeast Idaho is here to help in every way we can! Contact us online or give us a call at 208-522-2400.

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