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The Keys To Making Your Richmond Hill Rental Home Successful
Collaborative Property Manager • Feb 20, 2020
10 Important Aspects to Look at When Buying a Richmond Hill Rental Property
Do you wish to buy some residential property and rent it out for profit? If you’ve never done this before, it can seem quite overwhelming. Real estate investing
can be profitable, but it can also be dreadful too. There are several things that can go wrong if you don’t do your homework carefully.
If you want to invest wisely the first time, then let a real estate agent help you through the purchasing process. However, the actual property searches should be done on your own so that you don’t have an agent pressuring you into making a purchase quickly. Take time in your search until you find the right property. It will require a lot of due diligence and investigative skills.
Below are the top 10 considerations to make before choosing a profitable rental property for investment.
1. Neighborhood
Real estate is all about location. You must purchase property in a neighborhood that will attract the right tenants. The neighborhood should have a low vacancy rate, which means it is in high demand amongst renters. Think about the attractions in the neighborhood or nearby.
For instance, if a major corporation is headquartered in the area, then it’ll attract executives who’ll want to live there. If you own a rental property in that same area, then those prospective tenants will be fighting to rent your property. But if there is a university in the area, then your prospects will only be poor students who’ll likely have trouble paying their rent. They may only need to rent out your property for a portion of the year anyway, which means you won’t have a long-term tenant
2. Property Taxes
How much are Richmond Hill property taxes? If you want to profit from your rental property, then you need to make sure that your property taxes are not going to eat into those profits. On the other hand, high property taxes usually indicate that your property is in an upscale neighborhood. If you can snatch a long-term tenant who pays their rent on time each month, then perhaps you can still profit if the taxes are high.
Don’t always assume high property taxes equal a good neighborhood. Sometimes you can find bad properties with high property taxes, especially if there is a lot of crime in the area. Property tax information is public information, so you can research it at the local tax assessment office or go to their website to find it. Make sure you factor in the future property tax estimates too.
3. Schools
Before you purchase a family-sized home, do some research into the local schools of the area. The quality of the schools will determine the value of the rental property and its future resale value. Without good schools around, most renters with families will turn away and look somewhere else.
4. Crime
Bad neighborhoods usually have a lot of crime in them. You can research Richmond Hill crime statistics of various neighborhoods on the internet or by visiting the local public library or police station. Find out the rates of vandalism, burglary, murder, theft, assault and other crimes in the area. See if the crime trend has increased or decreased over the years. Obviously, renters to want to live in a crime-filled neighborhood. They would prefer a safer neighborhood with less crime.
5. Employment
How is the job market in the area? You can find out the employment statistics by visiting the local library or the website of the United States Bureau of Labor Statistics. Is there a lot of job growth in the neighborhood? Are any big companies moving to the area? If so, then workers will demand homes to rent near their workplaces.
6. Amenities
What amenities exist in the neighborhood? Does it have any gyms, public transportation stops, restaurants, parks, museums, or anything else of interest or convenience? Find out more about the local amenities by visiting City Hall or doing research online. If a private property has a lot of public amenities nearby, then it is a good find.
7. New City Developments
Are there any new developments being planned for the area? Check with the local municipal planning department to find out. If there is already construction taking place, then it means growth is happening now. Get in on the action by purchasing a property in the neighborhood before prices go up.
Be careful of neighborhoods with too many new property developments because that might create competition when you go to rent out your investment property.
8. Vacancies
Research how many rental listings there are in the neighborhood. If there are a lot of rental listings, it means no one wants to live in the neighborhood, or the demand is low. Sometimes a seasonal cycle might determine the demand, especially if there is a university nearby.
To be safe, choose a neighborhood with lower vacancy rates. Then you can find suitable tenants for your investment property on a long-term basis who’ll pay a higher rate.
9. Rental Prices
What are the average rental prices in the Richmond Hill neighborhood that you are considering? This is very important because this is the income you need to pay your property taxes, mortgage premiums, repairs, HOA fees, and any other property expenses you may have. You’ll at least want to break even so that your renter is paying your mortgage, but it would be nice to pocket some additional cash each month too.
Try to predict where the neighborhood will be in 5 years. For instance, if future tax estimates show a tax increase is going to happen, then you might not want to purchase the property if the future taxes would cut into your rental profits.
10. Homeowner's Insurance
Your homeowner’s insurance policy is a big expense that occurs every 6 months or 12 months. The cost of insurance depends on the chances of natural disasters happening in the area. If hurricanes, earthquakes or floods have a high chance of happening in your area, then you will be paying more for your insurance.
How to Choose the Right Property Type for Renting
The best starter property is a single-family house or condo. You might want to consider a condo because the HOA covers the maintenance duties and repairs. The interior is the only thing you need to maintain. Unfortunately, condos don’t have a high demand amongst renters. The rental prices are higher for houses because they are in greater demand than condos. Of course, houses require more maintenance and repairs on your end, so you must consider both options carefully.
After you have selected a good neighborhood, try to find a property that is likely going to appreciate in value. Don’t be afraid to look at expensive properties that are out of your budget. In many cases, sellers are willing to negotiate a lower price than what their listing price indicates.
You can get a good deal on fixer-upper properties if you don’t mind renovating them. Please consider the cost of the renovations if you go this route. Make sure your investment will pay off.
Professional investors recommend that you don’t pay over 12 times the total yearly rent that you would get for a property. For instance, if you plan to get $1,000 per month or $12,000 per year in rent, then you should pay no more than $144,000 for the property.
Hire a Property Management Service
Many property investors don’t want to handle their property management responsibilities themselves. They would rather hire the services of a property management firm to manage their property for them. You might want to consider doing this if you live far away from your property or don’t have the time to devote to managing it.
Our Servicies
Property managers are extremely helpful because they can screen prospective tenants, collect rent payments, host showings, manage repairs, and send you the rent money. They will also handle tenant complaints and stick up for you in case the tenant sues or has to be evicted.
Have questions? Contact Us!
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