A real estate agent is able to provide a professional eye you need for investment in a rental property, but it comes with its own stress of costs and other factors investors need to be aware of. Having yourself indulged in the game gives the benefit of unbiased approach you need to acquire before searching for properties in the local neighborhood. So let’s see the things you need to take into account before purchasing a profitable rental property in Dallas TX.
Locations that feature high employment chances are preferred—which means tempting more people and eventually more tenants. To figure how a particular area rates, you can always consult the U.S Bureau of Labor Statistics for authentic information. Consider the scenario a major firm is moving into a commercial area near you, it’s obvious the workers and employees will tend to shift towards that residency. However, the property prices will either fluctuate or rise depending on the name and type of corporation entering there. One drawback to this aspect is you are not the only one to prefer a firm to be next door to you, but there are also a large number of other people.
See if the neighborhood is filled with leisure and entertainment facilities that attract renters such as gymnasiums, public parks, shopping malls, bus stops, etc. You can easily find such perks in the online promotional literature of cities or particular areas that locates the perfect blend of such amenities with private properties.
Consult the municipal planning department of the state to access detailed information in all the areas that are prone to current or future developments. If a number of condominiums, parks, etc. are expected to rise in an area, then it is a good indicator of growth affected area. However stay vigilant of the areas that could affect the growth in surrounding properties, for example, hurting an activity and family-friendly green area. The newly added condos and other buildings may also increase the competition among renters, so be careful of such instances as well.
If there is an abnormally high number of real estate listings in an area that means it can be a seasonal cycle of a neighborhood going through “bad times”. Ensure whether it is a wise move to buy the property. Also see if you can cover up your capital in case such seasonal fluctuations in vacancies occur. The number of available rental properties will also help you determine how easy it would be for you to attract tenants. Relationship between the rental rates and number of vacancies is inversely proportional: landlords tend to raise rental rates when number of vacancies is low, and vice versa.
The rental income is the reason you are acquiring a rental property! So it’s better to determine what the average rent in your area is. If the rent is not what you want to cover your taxes, other expenses, and most importantly the mortgage payments, then it is advised to keep searching. Be very diligent and research extensively to see where the area will stand in the next five years. For instance, you may easily afford a property now, but some unfortunate future events such as increase in taxes, major renovations, will make it increasingly difficult to keep the affordability in check, not to mention losing the property due to bankruptcy later.
You will be needing to cancel the insurance costs from your returns, which is therefore helpful to know how much you will be needing to store. Remember if an area is prone to any kind of natural disaster such as floods, hurricanes, earthquakes, etc., then it is likely the high insurance costs will consume all or a large chunk of your rental income.