When it comes to finding a great rental property, it is vital to do your research and make sure you are finding the one that will provide you with the best rate of return. The average rental property owner will purchase an investment property within 30-minutes of their home. When you start looking at the properties available, you will want to consider a number of places to look at instead of just within a short window from your own home. Here are some tips that will help you pick a good rental property.
Following the 2% Rule
A quality real estate investment comes down to following the 2% rule. The 2% rule means you take a look at the money rent divided by the value in a percentage format. What does that mean exactly? You take the cost of the rent, divide it by the mortgage amount and find out your percentage. The 2% rule is a great way to ensure you are making a fair return, but it’s not always possible for every rental property.
Cash Flow Vs. Property Appreciation
When determining the best property to purchase, it is important to decide if you want the property for cash flow needs, or you are investing in it for property appreciation to sell later. Working with a property management company can provide help with cash flow needs. Setting the rent at the right rate will maintain a higher cash flow amount.
For investors seeking appreciation, it pays to look at real estate investing as a long-term goal. Most of the long-term investing starts with a property that you do not make a ton of money off in the beginning. The property tends to be newer, and easy to manage since it doesn’t need extensive repairs. Newer properties can attract tenants easily, and some will stay longer. It is important to know that the prices in these areas do not always match rents, so you really need to bank on that appreciation of the property to make money.
Be Mindful of Crime
When looking for quality real estate investments, always check the crime reports. Buying a nice property in a crime-laden area can be a tough sell for anyone. Renters want to live in areas where there is low crime, so it’s hard to attract quality tenants even if you do have an updated rental property. Touring the property is one way to know what you are getting yourself into, but it is also a good idea to search around the area. Look for signs of low-income concerns that could indicate an increase in crime. Certain areas do have a higher crime risk, and stores that offer payday loans, check cashing, liquor, and bail bondsman within a few blocks of the house are typically going to be located in a higher crime area. Use this map to help you locate the areas in Solutions, VA, that have the lowest crime rate.
Do HOAs Impact Rent?
When you invest in a property, you need to be aware of HOAs. While some people love HOAs due to their ability to provide a cleaner, nicer-looking area, they are not always the best. We have heard a number of horror stories related to HOAs, and as a renter, HOAs can be frustrating. Landlords can find their profit margin cut significantly due to HOA fees. Plus, HOAs can come with rent restrictions, which can be hard to enforce.
Consider investing outside your area if you would like to make some passive income. Keyrenter Property Management Solutions, VA, specializes in providing residential property management services to landlords of single family homes, duplexes, condos, and small multifamily units. We are not large apartment managers. Our purpose is to help landlords maximize the return on their investment property while eliminating the stressors associated with being a landlord (including bad tenants and maintenance issues). Services we offer include: property analysis, setting rent, tenant placement, leasing services, maintenance coordination, tenant relations, property inspections, rent collection. We offer superior customer service. Because we know how to find quality tenants that can meet the terms of their lease agreement, using Keyrenter’s 14-point tenant screening process, our eviction rate is below 1%!