The real estate market is similar to other markets in the sense that it experiences ups and downs, which is why it’s important to do detailed research before you dive into a new property. Do you know where to start with your research process? Here’s 5 tips for finding long-term rental properties in any kind of market.
5 Tips for Finding Long-Term Rental Properties
Are you an active investor looking for a way to acquire more long-term rental properties in their portfolio? Not all rentals are built the same, here’s some factors to consider when looking for a long-term rental property:
- Location of neighborhood
- Local property taxes
- Quality of schools
- Job opportunities
- Plans for development
- Low crime rates
On top of the factors listed above, there are more intricate details you should be thinking about when it comes time to finalize the deal. Continue reading to learn how to discover the best long-term rental property according to your personal investing needs.
Find the Right Location
A city or locale where the population is growing and a revitalization plan is underway often represents a potential investment opportunity. A neighborhood with a low crime rate, easy access to public transportation, and a growing job market may also mean a larger pool of renters. When looking for a profitable property, look for a location with low property taxes, a good school district, and other amenities like restaurants, coffee shops, shopping areas, trails, and parks nearby.
Identify Your Priorities
If you’re looking to make money in real estate, then you need to identify your priorities as an investor. Knowing your investing goals can help you to carefully plan your strategy in the market and find a property that meets your specific needs. Keep in mind the number of properties you want to eventually acquire and what kinds of financial or personal goals you wish to meet; a strong foundation sets a strong base to build an empire upon.
Establish a Budget
When looking for a long-term rental property, you should already have a budget established so you can find a property that meets your financial goals. When planning your budget, a wise investor always has enough liquid cash available to cover 3-6 months of mortgage payments including principal, interest, taxes, and insurance. Think of your extra cash as your safety net for the months that fail to generate profitable cash flow.
Have Your Information Ready
Knowing your credit score, debt-to-income ratio, and loan conditions when applying for a new property will give you the leverage you need to finalize your next big real estate deal. In any market conditions, sellers will be on the lookout for buyers that are fluent with their personal investing information. In a seller’s market, buyers that put in offers using hard money loan options are more likely to close a deal due to the loan’s fast approval rate. Having your information readily available regarding your strategy and personal constraints will speed up the process and give buyers the confidence they need to finalize the deal.
Know Your Rewards and Risks
When looking for your next long-term rental property, it’s wise to thoroughly understand the risks and rewards of an investment before diving into it. Long-term rental properties are a great way to generate income passively, considering investors often take advantage of this and work on multiple projects at once. Many investors see real estate as a safe haven for extra cash due to its ability to grow over time with the market. Investing in real estate comes with some tax benefits, too. Rental income is not subject to social security tax and in some cases the interest you pay on your property loan may be tax deductible.
Finding a long-term rental property can come with its risks as well. Firstly, maintenance costs and property management expenses can decrease rental income, which is something to keep in mind when planning your budget. Also, real estate is not a liquid asset and could take some time to sell, especially in volatile market conditions. To decrease risk, an investor should always have an exit strategy before finalizing their new investment in the real estate market.
RCN Capital offers short-term and long-term financing options for real estate investors. Whether you are looking to fix & flip properties or hold properties for rental income, RCN has flexible options that are suited to your needs. Connect with us today to discuss your next real estate investment.