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Rental
Property Buying Tips and Guide on
Selecting a Profitable Cash Cow PART 2
Are
you shopping for a new rental property? Then make use of our
tried-and-tested rental property buying tips to spot the important
differences between a rental gold mine and a money sucking liability in
this Part 2
of our Rental Property Buying Guide.
Have You Read
Part 1? If No, Click here to Part 1 for more
Rental Property Buying Tips.
Do
Your Homework by Comparing the Prices of Similar Rental Properties
One
of the most important things when selecting rental property is
to
make sure that you are getting a good bargain for your
investment. To have a good idea of the rental property's fair
market price, you will need to do dig around and find out the prices of
similar property types that were sold recently.
By "similar
properties", we are referring to rental properties of the same type
(such as town house or duplex etc), similar floor area and within the
same neighbourhood. As property prices are always changing, what will
be most helpful to you are the prices of rental properties that
were sold off in the past 3 months.
What if the sales
of properties are slower in your area and you don't have enough data to
decide whether the rental property is a good buy? Then you can try
looking at the less updated prices of rental properties that
were
sold off in the last 6 months instead.
Rental properties deals
that are in escrow can also be a valuable source of information and
rental property buying guide when
you are choosing and comparing rental property prices.
When
a property is in escrow, it means that the buyer and seller
have
agreed to the real estate deal provided that certain conditions are
met. For example the buyer may require the rental property to pass home
inspections while the seller wants to make sure that his buyer is able
to get his hands on a housing loan.
Is
the Price Value of Your Rental Property Likely to Increase in the
Future?
There
are 2 ways that you can reap more profits from a rental property - When
the value of the rental property rises or when the property is able to
command higher rents from tenants. This is something that you should
take home from this rental property buying guide.
When you are the owner of a rental property, the
benefits you enjoy from an increase in property values are two-fold.
When your rental property values rise, it means that you will be able
to ask for higher rents as well.
There are 2
major forces that
will affect the prices of your rental property - Property market cycles
and demand for housing in your rental property's neighbourhood
During
a housing boom, prices of property will tend to skyrocket in most
areas. If you want rental property buying tips, be extra careful during
a boom because most rental properties will be heavily overpriced. On
the other hand, there will be a selling frenzy during a property market
crash and it will be much easier for you to snag great
bargains.
Watch
out for any large scale developments or warning signs in the
neighbourhood of a rental property that you are choosing or selecting.
If a
major shopping mall or public railway transport is coming up nearby,
you can probably expect your rental property to have a brighter future
than a home sitting in a decaying slum zone.
What are Your Best Tips and Advice for
Buying a Rental Property Investment?
Every investor has own his own tried-and-tested rental property buying tips and tactics. What are the crucial things that you will watch out for when buying your rental property? Share your valuable experience with everyone here - We will love to hear your tips, comments and real life stories:
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