Rental investment property: What goes into buying it?
The real estate investment involves risk but is also equally worth taking – if you want to make it large in life! The same applies to rental investment in a property. A lot of forethought, unbiased approach, planning and circumspection go into buying a rental investment property. A property with brighter financial prospects would count as a good decision that can help one earn and save a lot of money. You need to undertake the task of investing with an open mind while paying close attention to your investment range.
Here are top factors to consider when choosing a rental investment property.
- Location & Infrastructure
First and foremost, the location determines the rent population that would be living in the space. For instance, if the location is near a college or at a cheaper rate, it will attract more students or bachelors. You would have to consider vacancies and how frequently they occur. For students, it may be more than regular office-employed bachelors. If you want your rental property on long-term lease, it would be ideal to look for other options rather than students.
Research the location and consider it alongside other factors like entertainment options such as cinema complexes, malls, playgrounds, parks, water, and electricity supply. This will help you in approaching the prospective renters more. You also need to keep a tab on upcoming facilities and what can work in your favour as the landlord of the rental property.
You ought to be well-versed with the area and its either developed or planned projects to be able to draw in the prospective renters. While some of the areas in Pune like Kothrud, Undri, and Ambegaon offer good rental locations, high-end rent-seekers can opt for Koparkhairne, Ulwe, and Airoli in Navi Mumbai.
Be aware of controversial spots and areas that have long traffic snarls or are leading to the loss of greenery. Try to avoid them as it may demean prospects of your rental investment property.
- Social infrastructure
Nursery admissions allot points to kids getting admitted to the neighbourhood schools. This is one of the primary reasons causing renters to look for areas with educational institutes like schools and colleges. The prestigious and renowned educational institutions add to the value of your investment while being a talking point when looking for new renters.
Now, it is no more about having a place to live. Even renters have become demanding in terms of facilities and choices. The garden, terrace, playroom for children, parking space, etc are some of the facilities asked by the renters. Also, gated security, space for senior citizens are some of the other requisites. A place with a good ambiance has a preference for families deciding to rent.
- Employment scenario
If neighbourhood has offices or hubs, the chance of your rental property finding more takers multiplies. More job opportunities naturally allure more renters.
- Know your tax liabilities
As the landlord of a property on rent, you need to know how much tax you would have to shell out. The high-end areas attract more tax and traction for long-term leaseholders. But preference should be given to developing areas.
You as a landlord
- Good and solid research is the key.
- Make sure you have the requisite finances.
- Find double income families which are more likely to pay their rent on time as well as be long-term leaseholders.
- Once the location is finalized, look for a property that can appreciate over time and give you handsome returns. Ideally, it should fit your budget. But if it is a little above your budget, you can either negotiate with the developer or take the bank route.
- Don’t rush into buying a property that requires a lot of repair and management in the longer run. You can be open to certain cosmetic additions but do not make it your sole renting point.
- Gather feedback from the local residents
Make sure you know the ideal rate of rent in the area before posting online or telling your prospective renter. You need to keep a tab on the facilities and development that may hamper or add to the rent margins in the coming 5-10 years.