When you’ve decided that you want to get into the housing business by owning rental properties for some extra monthly and annual income, you have to make sure that you play your cards right, or it can be a challenging and impossible experience for you. It sounds a lot easier than it is; finding a house, finding a tenants, collecting rent, but what many of us don’t understand is the fine print, the fact that it’s a lot of responsibility and you have to be strategic in order to make a great profit.
There are so many factors that come in to play with this process and without knowing all of them, you may run into some bumps in the road that could’ve been avoided. Here’s what you need to consider before purchasing a rental property:
This might seem like a given, but many people see the low price of a home and assume it’s a steal, not paying attention to the fact that the neighborhood isn’t in the most appealing condition. Even if your house is the nicest on the block, it may be difficult to find renters who would like to rent from you at your desired price because of the way the neighborhood looks and feels to them. Also, if you want to rent out a home in a college town, make sure you’re aware of the fact that those students will be moving in and out of the area frequently so you’ll have to be on top of finding tenants every year or so.
Property taxes vary from town to town, but it’s important to factor in the costs before you purchase a home. Chances are you already live in the area of Colorado Springs that you want to own a rental property in so you’re aware of it but make sure you run through it and take that into consideration. The nicer the neighborhoods, the higher the property taxes are most likely, but that can work in your favor as you may be able to attract long term renters who can afford the rent you want to charge.
The quality of the school district can be one of the most important factors when it comes to the value of a home. And if the value of your home is low, then you won’t be able to charge as much for rent as you probably would’ve hoped. A benefit to owning a rental property near a school is that you have a better chance of finding long term renters with a family that needs to stay in the area for their children’s education. Remember that while you can charge a higher amount for rent despite a home’s value decreasing, that only takes care of your monthly income, what happens when you want to sell? When purchasing a rental property do your best to buy it in an area with a great school district.
The Colorado Springs job market is decent, and that could mean that finding renters who can qualify based on their salaries can be a challenging task, but it can be done. If at the time you’re reading this it seems like the area is growing and more jobs are being created then it’s a perfect time to buy. The last thing you want to do is deal with renters that can’t seem to find work or have been laid off or fired and therefore can’t afford to pay the rent they owe you.
The housing market
Be sure to take some time research the state of the local housing market where you want to purchase a rental property. If there seems to be a lot of houses sitting, waiting to be sold, and many rental properties not being able to be filled, it may not be the right place for you to rent. It’s important to speak with a real estate professional to keep track of these trends in order to receive the best advice possible on this. You don’t want to purchase in a neighborhood that isn’t improving, and hasn’t for a while.
These are just five of the many factors that you need to consider before purchasing a rental property. It’s something that requires much thought, research and advice from professionals. Contact Merit Co today for information on the Colorado Springs market, as well as tips for starting out on this profitable adventure!