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Guide for rental property investment
From the initial choice to purchasing your first rental property as an investment, there’s plenty of planning and work involved.
There are many aspects to be considered when looking for an income-generating property. Kishor Pate, the CMD of Amit Enterprises Housing Ltd tells us that one should begin hunting for a rental investment property with an unbiased approach.
First examine the location for parks, shopping malls, gymnasiums, multiplexes, public transportation stops and all the other factors that would conceivably entice tenants.
You also need to know what new developments are coming in, and what has been zoned for special purposes by the local municipality. You are looking for a region with excellent growth prospects where schools, business parks, shopping malls and entertainment zones are either already in place or planned. Simultaneously, be wary of any new developments which could reduce the value of surrounding properties, such as by causing the loss of green open spaces or public parking facilities.
Property taxes aren’t standard across the board and, as an investor intending to earn money from rent, you would like to know about how much you’ll be losing to taxes. High property taxes are obviously justified in very good areas which are superlatively connected. Such areas also usually attract long-term renters. Locations in upcoming growth corridors should be preferred.
Your tenants may be a family with kids, or intending to have kids, who would prefer areas which are near to good schools. Presence of quality schools will positively impact the worth of your investment. Remember, the total worth of your rental property comes into play when you finally sell it.
Areas with growing employment opportunities have a tendency to draw more people – meaning more renters. Obviously, the most desirable situation for you would be to own a rental property near to or well-connected to an established or rapidly growing workplace hub with reputable companies active and generating jobs there.
Today, rental home seekers prefer projects which add value to their lifestyle. Good projects with the best lifestyle deliverables may be out of their purchasing reach, but they expect to get such facilities in a rental home.
Projects with amenities like garden, children’s play area, sitting area for elders, reliable security and professionally managed maintenance are always preferred.
Make sure you find out enough about the region to judge where it is headed in the following five years. Property taxes may rise and even if you can afford them now, significant developments in the area which increase property taxes may make them less affordable.
When you’ve narrowed down the right location, look for a property that can potentially yield you steady and growing rental income as well as appreciation on the capital value of the home. Consider properties which are within your budget and slightly above it as well. The slightly costlier options can be paid for by some bank leveraging, and developers may be open to negotiating the price.
Also, remember that buying property can become even more desirable with some modifications and cosmetic uplifts, which will attract tenants who are willing to pay higher rents. Such changes to the property will also serve the purpose of increasing the sale value of the home in case you want to put it on the market after some years of good rental income.
Do your research well and ensure that you have your finances in place if and when a good option comes up. Remember, real estate investing does not begin with purchasing a rental property - it starts with creating the finances for it.