Now that the real estate market is on the rise, some homeowners are considering purchasing additional property to take advantage of remarkably low home prices coupled with low interest rates.
Is it wise to invest in a rental property?
If you’ve ever dabbled in the idea of becoming a real estate investor, this may be the best time to take the plunge.
According to expert real estate agents, this is the first time in years that the perfect storm has struck: In many areas of the country, house prices are lower than ever and interest rates are just as low. This means that it is economical to borrow and buy, creating the perfect opportunity for novice and seasoned investors to purchase a new property.
4 steps to follow before buying a rental property
But not so fast … Before deciding to invest in a second property, it is important to use the following criteria to ensure that you are buying a good home that will serve as a solid investment:
1. Start with the right real estate agent. Working with the right real estate agent can make or break your investment property buying experience. If you are looking for a home in a specific area, it is best if the real estate agent is well acquainted with the neighborhood and region to find the right home to meet your needs. If you are looking for a rental property in another city or state, work with a local real estate agent who knows what they are doing; A local real estate agent can also recommend an Austin insurance agent for affordable home insurance when shopping.
2. Research the quality of the neighborhood. The area where you buy can affect the current value of a property, as well as how much it appreciates or depreciates in the future. If you plan to rent your property to tenants, the local neighborhood will also determine how easy it is to find a new tenant after the lease ends. First-time homeowners may do better in a densely populated area with a regular rental rotation, such as near a university or medical center.
3. Check with your local school system. If you are renting a multi-bedroom home, you may want to count on the fact that a tenant is likely to have children and is looking for a good school district. Before you sign on the dotted line to buy a rental home, make sure you are satisfied with the grades of the elementary, middle, and high schools in the area.
4. Get more information on local crime statistics. If you buy a home in a high crime area, you are preparing for a disaster in the future. You may need to address tenant complaints about regular criminal activity. When researching crime statistics for a neighborhood, it is best to consult public records or the local police station. Specifically, learn more about misdemeanors, felonies, and vandalism rates. Also, make sure you have a strong homeowners insurance policy that will protect you as a homeowner, as well as your tenants in the event of theft or vandalism to your property.