Planning to purchase a property with the sole purpose of renting it out? Adding rental properties to your portfolio can be an excellent investment, but only if you know what you’re looking for.
Look at the Neighbourhood
A bad neighbourhood makes for a bad investment. It doesn’t matter how nice the property is, if the area around it is dangerous, it will be hard to find higher-paying tenants. Likewise, if you are near a university, you’ll struggle to keep the place rented throughout the summer.
Aim for an area where you can see growth, but the prices have not yet jumped. If it’s near schools and amenities, families will be more likely to rent long term, so it could be a very good investment.
Consider Taxes
How much will you pay on rental income, as well as your stamp duty and council tax? These are things to consider when you’re figuring out how to make a rental property work for you. All costs must be included in the calculations, so be sure to include the taxes.
What’s the Resale Value
Though the property is up for rent and you intend to rent it for the time you own it, eventually, you will want to sell. It’s very important to ensure that you have a property you can easily sell off when you’re ready. You never know what might happen and the ability to liquify your assets easily is always a good thing. Areas with good local development and amenities will tend to do better in resales.
Check Out Jobs
What is the job market like? Will your tenants find it easy to work in the area? The more people are able to work near their home, the better your tenants will tend to be. They’ll have the income necessary to pay the rent and they’ll also be able to find another job if need be. While this isn’t the only criteria to judge a potential rental for, it should be considered.
Look at Crime Rates
Avoid purchasing homes in crime-riddled areas. The resale value tends to drop considerably when you have a home in an area that is considered dangerous. It’s also a major deterrent to renters who may be interested in your home. Always check the crime ratings for the areas you’re interested in and then avoid the high crime places.
Are you ready to invest in a rental property? Let Andrew Lee & Co Property Lawyers help you out. Contact us today for more information.
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