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1. Infrastructure It’s important to consider a town’s infrastructure when looking for an investment property, especially in terms of what future investment is to be made in that area. Local Authorities and Councils will have an annual budget for both the maintenance of current infrastructure and also for the construction of new infrastructure projects. Finding out how much the annual budget is and future investment will give you an idea of how proactive the authority is in attracting new residents, extra funding and business opportunities. Most councils will be happy to provide most of the information and a lot of it will appear on their websites. Also look at the websites of local big businesses to get information on their future plans which will attract investment and create new jobs in the area. 2. Proximity to Amenities In most cases, the main purpose in buying an investment property is to attract tenants who will pay a weekly or monthly rent. It’s important to know what type of tenants you are looking to attract and so any potential investment property will need to be close to the amenities required by the tenants. A city worker will want to rent a property close to shops and transport whereas a farmer will have different requirements. Most properties in close proximity to the town will rent fairly easily compared to those which are a 15 minute drive outside of the town. Properties close to the town will also attract tenants who don’t have their own transport. So it’s best to know what your tenants requirements will be before you purchase. 3. Local Employers It will always be easier to find tenants in towns where there are large employers in the vicinity. These include factories, large shopping malls, hospitals and universities. With hospitals, many of the employees may be employed on a temporary basis and so owning or buying their own property in the area may not be a choice for them and renting is the easier option. Also, in the case of universities, a lot of the students will come from out of town and so renting is again the best option. This offers them more flexibility however it also means that your investment property could be vacant during certain months of the year and may switch tenants on a regular basis. Again, be sure to research the future plans of these employers. If a major employer is due to shutdown or relocate in the near future then there will be a glut of empty properties with landlords doing whatever they can to fill them including drastically reducing the rent. 4. Geographic Location This will determine both the type of tenant you get and also how easy your investment property will be to rent out. Holiday properties near the ski fields will command a higher rent than a property in the city however it may only rent out for a few weeks per year. A beach house will also be in the same position. Again, it’s important to understand the type of tenants in the area, what they are looking for, how much they are willing to spend, etc. A beach house may command a high rent but may only attract retirees who are willing to pay top dollar and so this narrows the number of potential tenants. Properties closer to cities and amenities will likely attract a higher number of tenants willing to pay a lower weekly rent. 5. Demographics Spend time understanding the demographics of the areas population and you will have a better idea of the type of tenant you can expect. Find out the populations’ average salary, the different age brackets, percentage of those married and single and the percentage of the population that rent. The demographic information will show if the town’s population has been growing or declining over the past number of years and therefore if an investment is a safe bet. It will give you an idea of the earning capacity of tenants and how much rent you can expect. It may also show movements of parts of the population to new parts of the same area due to factory closures, increase in crime etc. 6. Property Median Prices Historical property prices will be a good indicator to the fluctuations in property values in the area over time. A property may look like a bargain at first glance but with a little research you may discover that the same or similar properties changed hands previously for a lot more money. There may be a simple explanation for this such as a vendor wanting a quick sale but it may also reflect a dive in the local property market for various reasons. Median prices will give an indication of what you can expect to pay for the different types of properties (no. of beds, land size, etc) in the area and the figures may also show the number of recent sales. The historical figures will also give a pattern of historical growth or decline in the area over time and this could be used to indicate a property’s future value. 7. Occupancy/Vacancy Rates Each area will have a certain percentage of rental properties tenanted (occupied) and the remainder without tenants (vacant). Towns with a high vacancy rate (normally deemed to be more than 4%) will make it possibly harder to find tenants to fill your rental property as it shows a lot of competition for too few renters. Too few renters will also mean that landlords will have to be more creative in attracting tenants and may need to reduce the rent and offer other incentives to entice renters. Areas with high employment and a strong outlook for the future are likely to have a higher occupancy rate and this may even cause competition amongst renters, allowing landlords to set higher rents. 8. Property Managers Finding a trustworthy property manager is important if you will not be looking after the property yourself in terms of finding tenants and collecting the weekly or monthly rent. Good property managers will communicate regularly, carry out periodic property inspections, arrange repairs and, most importantly, regularly deposit the rent (minus expenses) to your bank account. There are also many other duties a property manager can carry out and it’s important to question those managers in the potential area to find one or more likely candidates that are going to take care of your investment. Find out how many rental properties they manage, how long they’ve been in business and ay other questions you deem necessary until you find one you are happy with. In closing, the above points are only guides for you to learn more about an area before you make an investment. There may be more factors you’ll need to consider depending on your situation but if you research the above you naturally increase the amount of knowledge you have about the area. And the more knowledge you have will reduce the risk of a potentially poor investment.
Article Source: http://www.BharatBhasha.com Article Url: http://www.bharatbhasha.com/real-estate.php/38784
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