Investing in a rental unit is a good step in building on your long-term investment revenues. The decision you make should be based on market research and detailed analysis on the potential growth of the investment as well as the risk factors you are likely to face.
The real estate business is not a get rich quick scheme. It requires work and a hands-on approach to managing your investments. To help you learn more about what you should consider before buying the rental unit, here’s a list of what you should look out for.
Location of the Rental Unit
Location determines several other factors that include, the rental rates, the occupancy level of the tenants, as well as the caliber of tenants in your unit. Your primary concern should be to maximise on the rent as well as have fewer issues with the tenants when it comes to renting payment.
Units close to social amenities like schools, parks, or hospitals do fetch a higher rental value. Assessing the kind of tenants, college students, single individuals or families should feature in your final decision.
Before purchasing, you should make income projections against the backdrop of the possible expenses you could incur. Inquire about property costs that have been incurred in the last 12 months and perform an analysis of the impact it would have on your income levels.
Plumbing and Other Renovations
Plumbing has been singled out as the most important aspect because of its sensitivity in sanitation. On average, plumbing may cost you about $170 to $457. According to A. Messe Supply, a plumbing supply store in Chicago, “The services are charged by the hour at a rate of $45 to $150 all dependent on the task, location, and the completion time frame”. The work ranges from installing water heaters, fixing the kitchen and bathroom water and waste systems. There should be no compromise on this and as a buyer, get an expert opinion on the plumbing condition.
Other likely renovations you would have to make may include the electrical system, air conditioners, and the roof’s condition
You should get value for what you pay for. Hire an expert to evaluate the unit. The price tag on the house should be a close enough amount to the real value of the house. The key consideration is income and the value you pay for, should not hurt your profit margins from the revenue streams.
As a measure of prudence, get to know the rates of the property taxes on the locations you have identified. Do consider inquiring from the authorities on the tax history of the property you have singled out.
Managing real estate investments requires a hands-on approach. There are two ways of managing your rental investment. The first is dealing with the tenants in your capacity as a landlord. Secondly, you could hire a professional to administer the property for a fee. The ultimate decision is based on your assessment of whether or not you will be open to dealing with the tenant challenges.