Buying income properties can sometimes be tricky. Before choosing a potential Bixby single-family rental home, a first-time investor needs to know quite a lot of things. That’s because not everything is obvious to first-time investors. The price of the property is really a key piece of information to have, but that doesn’t mean that it is the most important one. In truth, the top four features to watch for in a great income property are property taxes, rental rates, future development, and vacancies. Through researching and gathering data about these four areas, you can better narrow your property search down to a short-list and then select the most profitable options.
Property Taxes
The cost of an income property begins with the sales price but certainly doesn’t end there. Experienced investors recognize that ongoing expenses such as property taxes do have a huge impact on your rental home’s long-term profitability. Property taxes vary widely from town to town, and sometimes even neighborhood to neighborhood. Acquiring accurate property tax numbers for the exact property you want to buy before making your offer is crucial. A lot of towns are now offering this tax information online, and the number of towns that have this service is rapidly growing. What’s more, if the municipalities aren’t offering the information online yet, they usually have an assessment office where this information is on file. Other local news should also be checked carefully for any hints of a property tax increase in the near future. High property taxes, though not necessarily always a bad thing, may serve as indicators of economic trouble in areas with relatively good residency.
Rental Rates
In-Depth knowledge of rental rates in your area is key to choosing which property to invest in. Also, another pertinent detail is how property taxes affect your chosen investment. As they say, failing to plan is planning to fail. In investments like this, thorough planning is crucial. As such, knowing what the average rental rate in the area of your choice is key information — information that can be gathered by a thorough marketing analysis. Knowing the figures will benefit you in your assessment of whether your expected rate will cover your costs, including the mortgage payment, taxes, maintenance, and other matters. When dealing with property taxes, it’s best to gauge where the rental rates in the neighborhood may be headed moving forward. Looking at the recent past may help, as will staying on top of local development projects or shifts in demographics.
Future Development
Also, remember to research any plans for future development in the area. Do this as you collect data on property taxes and rental rates. Generally, the municipal planning department in your area will have helpful information on any new zoning and development plans. Construction sites may be good signs of ongoing development in an area. This is something to look out for around your neighborhood and in the areas nearby. If a lot of building is underway, that may be a sign of an area experiencing strong growth. While new housing developments aren’t necessarily bad, they can potentially lower the value of properties, especially for the houses that are already built around the area. With many investors and builders, it’s inevitable that the rental market will see more brand new homes — new housing that could wind up being your competition.
Vacancies
The final key feature for choosing which investment properties to buy is the number of listings and vacancies in your area. For as long as the number of vacancies in a particular area is relatively low, a high number of rental homes is not necessarily a sign of trouble. But, if the number of unrented properties is unusually high, that could be indicative of a neighborhood in decline. Should there be a lot of vacancies in your area, the lower rents will go as landlords compete for tenants. You just might find yourself losing money if your rental rate dips below your ongoing expenses.
In Conclusion
While doing research on every potential income property is a lot of work, Real Property Management Tulsa can help lighten your load. We offer free rental property analyses for investors, which can help you more easily identify whether the income property you want to buy is a profitable option. Contact us online or call us at 918-532-7020 to learn more!
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