Buying income properties is not always easy. There is a lot to know before choosing a potential Georgetown single-family rental home since things aren’t always clear or immediately visible to first-time investors. Even though the price of the property is a key piece of information to have, it isn’t the most important one. Actually, the top four features to watch for in a great income property are property taxes, rental rates, future development, and vacancies. By researching these four areas, you can better narrow your property search down to the best options. From there, you can choose the most profitable ones.
Property Taxes
The cost of an income property begins with the sales price but certainly doesn’t end there. As investors with experience know, ongoing expenses such as property taxes can have a huge effect on your rental home’s long-term profitability. Property taxes vary widely from town to town, and sometimes even neighborhood to neighborhood. Acquiring accurate property tax numbers for the exact property you want to buy before making your offer is crucial. More and more towns are now offering this tax information online, making it really convenient. Those municipalities that don’t would usually have an assessment office with the information on file. Other local news should also be checked carefully for any hints of a property tax increase in the near future. An area that tends to bring in residents could still be subject to high property taxes. Even though that might not always be a bad thing, it could very well be a sign of underlying issues in real estate.
Rental Rates
Property taxes will certainly affect your investment. How they affect your investment is another piece of information that is just as important as in-depth knowledge of rental rates in your area. These are important to know before you choose your property. A thorough marketing analysis can provide detailed information regarding the average rental rate in the area which you plan to buy. This can be of great help to you, for when you finally decide to make that purchase. Refer to the data yielded by the analysis to help you assess whether your expected rate will cover your costs, including the mortgage payment, taxes, and maintenance. When dealing with property taxes, it’s best to gauge where the rental rates in the neighborhood may be headed moving forward. Looking at the recent past may help, as will staying on top of local development projects or shifts in demographics.
Future Development
Stay on top of things by being proactive: gather data on property taxes and rentals, and do your research on any plans for future development in the area. Generally, the municipal planning department in your area will have helpful information on any new zoning and development plans. Look around the neighborhood and nearby areas for any signs of ongoing construction. This indicates development in the area. If a lot of building is underway, that may be a sign of an area experiencing strong growth. While new housing developments aren’t necessarily bad, they can potentially lower the value of properties, especially for the houses that are already built around the area. Brand new homes are popping up in the rental market because of the many investors and builders, and these new homes could wind up being your competition.
Vacancies
In order to be thorough with your decision, know the number of listings and vacancies in your area. This will help you determine which investment properties to buy. For as long as the number of vacancies in a particular area is relatively low, a high number of rental homes is not necessarily a sign of trouble. On the other hand, an unusually high number of unrented properties is characteristic of a neighborhood in decline. Every time there are plenty of vacancies, the lower rents will drop as landlords compete for tenants. If your rental rate dips below your ongoing expenses, you may end up losing money.
In Conclusion
While doing research on every potential income property is a lot of work, Real Property Management Longhorn can help lighten your load. We offer free rental property analyses for investors, which can help you more easily identify whether the income property you want to buy is a profitable option. Contact us online or call us at 512-580-3099 to learn more!
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