The first thing you should do before deciding to put your money in a real estate investment is researching rental properties. No doubt, buying investment properties and renting them out to tenants for monthly rental income is one of the best ways to make money in real estate investing. However, it is important to take the time and put the effort into researching rental properties well and diligently instead of relying on your intuition or someone else’s opinion, especially if you are a beginner real estate investor. If you are new to the exciting world of real estate investments, you will want to follow the tips below to ensure that you select a real estate property that will provide you with a good return on investment, both in terms of cash on cash return and cap rate.
Tip 1: Researching Rental Properties Is About Researching the Neighborhood
The first step in the process of researching rental properties is nothing that a beginner real estate investor cannot master right away. It simply requires that you drive through the neighborhood of your choice to see whether it really makes sense to invest in real estate in this particular location. Remember? Location location location – the 3 most important determinants of good return on investment in real estate! To assure a good location for owning an investment property, drive by at different times of the day to get a feel for the community. How is the neighborhood during the day? In the evening? At night?
If driving around left you with the impression that this neighborhood can be a good location for your first investment property, take it a step further and get out and walk the neighborhood. This will give you a good sense of the walkability of the location, which is an important factor for tenants, as well as a chance to talk to local business owners and residents. Ask them how it is to live and work in this location. Is it safe? Is it busy? Do lots of people live and shop here? Moreover, ask them about any future plans for development of the neighborhood which they might be aware of. Always keep in mind that the best investment properties are located in areas primed for growth.
Sign up for Mashvisor now to start selecting the best neighborhoods for investment properties in the US housing market.
Tip 2: Researching Rental Properties Is About Researching the Future Development Plans in the Neighborhood
As we have already hinted at, the best investment properties which will generate good return on investment are those located not only in well developed areas but also in locations which are expected to undergo major new developments. So, talk to the city government to find out if any plans are in the works for new developments in and around your neighborhood of choice. This will give you an idea if any jobs are expected to come to the neighborhood, which is a main determinant of the future demand for rental properties in the area and of real estate appreciation (whether your investment property will increase in value). Talking to various officials and business owners will provide you with a lot of information from those who are directly involved in the community. So, this is an important step of researching rental properties in an area where you have not invested in real estate before.
Tip 3: Researching Rental Properties Is About Getting Information About Real Estate Comps
Property comparisons, or real estate comps, are an important part of the process of researching rental properties. The way to get real estate comps is to conduct real estate market analysis, or comparative market analysis (CMA). Alternatively, you can talk to a real estate agent to provide you with a list of properties that have sold recently in the area where you are researching investment properties. You need real estate comps to figure out what price real estate properties are selling for to determine whether the property price level in the neighborhood is within your budget.
Sign up for Mashvisor now for easy access to real estate comps in various neighborhoods in the US housing market.
When researching investment properties, it is important to compare selling prices to asking prices to determine how competitive the local housing market is and whether it is a buyer’s market or a seller’s market.
Tip 4: Researching Rental Properties Is About Researching the Rent in the Neighborhood
Rent, together with your one-time expenses as well as recurrent costs, is what will determine your return on investment for rental properties. You have to know the potential for rental income before you buy an investment property. Remember to study the rent level for the type of property that you are interested in. For example, if you plan to buy a single family home, check out local rents for single family properties similar to the one you want to purchase. If you want to buy a multi family home, then research the rent level for multi family properties in the neighborhood.
It is also important to talk to a real estate agent about future expectations for the rent level in the area. This is crucial when researching investment properties because you want to know whether your rent will go up or down in the medium and long term as owning rental properties is very much a buy-and-hold real estate investment strategy.
Sign up for Mashvisor now to start researching rent levels in various neighborhoods in the US housing market.
Tip 5: Researching Rental Properties Is About Visiting Real Estate Properties for Sale
Once you have gone through all the previous steps in the process of researching rental properties, it is time to actually visit properties for sale in the neighborhood of your choice. Have your real estate agent take you to several properties within your price range as this will give you a better view of the value of real estate properties in the neighborhood. Take this opportunity to ask your realtor all the important questions about access to schools, hospitals, public transportation, shopping areas, and jobs for each of these properties for sale.
Tip 6: Researching Rental Properties Is About Using Mashvisor
We live in the 21st century, and it is important to make use of technology in any aspect of our life, including when investing in real estate. Thus, if you want your researching rental properties to yield to best results, you should use Mashvisor, a multifunctional real estate investing tool to help new and experienced real estate investors make the best investment decisions. Mashvisor will help you with the neighborhood analysis, with the real estate market analysis, with the investment property analysis, with determining the rent level, with choosing properties for sale, and with ultimately selecting and buying the best investment property in your city and neighborhood of choice.
Sign up for Mashvisor now to start researching rental properties and buying the best investment properties in the US housing market.
When researching rental properties, you want to take your time to find out as much relevant information as possible. In the process, remember that the neighborhood (or overall location) is as important as the specific investment property for determining your return on investment. Be a smart real estate investor and invest in properties only after you have researched them well.
Meanwhile, to continue growing your real estate education, keep reading on Mashvisor.