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Top 4 Features to Look for in a Superb Income Property

Model Home of Income Property in Carolina BeachBuying income properties can be a complicated business. There is a lot to know before choosing a potential Carolina Beach single-family rental home since things aren’t always clear or immediately visible to first-time investors. While the property’s price is a key piece of information to have, it is not the most important one. As a matter of fact, the top four features to watch for in a great income property are property taxes, rental rates, future development, and vacancies. By information gathering and researching these four areas, you can better narrow your property search down to a shorter list, and from that list, select the most profitable options.

Property Taxes

The cost of an income property begins with the sales price but certainly doesn’t end there. As investors with experience know, ongoing expenses such as property taxes can have a huge effect on your rental home’s long-term profitability. Property taxes vary widely from town to town, and sometimes even neighborhood to neighborhood. Before making your offer, however, make sure that you get a hold of the accurate property tax numbers for the exact property you want to buy. More and more towns are now offering this tax information online, making it really convenient. Those municipalities that don’t would usually have an assessment office with the information on file. Furthermore, check local news carefully for any hints of a property tax increase in the near future. It’s always a good idea to stay one step ahead of things. Even though high property taxes are not always a bad thing in areas that are generally known to be good residences, high taxes could indicate economic distress.

Rental Rates

Property taxes will certainly affect your investment. How they affect your investment is another piece of information that is just as important as in-depth knowledge of rental rates in your area. These are important to know before you choose your property. A thorough marketing analysis can provide detailed information regarding the average rental rate in the area which you plan to buy. This can be of great help to you, for when you finally decide to make that purchase. Once the figures are in, you can start assessing your expected rate and whether or not it will cover your costs; other pertinent information including the mortgage payment, taxes, and maintenance should also be addressed.  As far as property taxes are concerned, remember to gauge where rental rates in the neighborhood may be headed in the future. Looking at the recent past may help, as will staying on top of local development projects or shifts in demographics.

Future Development

Any plans for future development in the area of your choice should be researched and taken into consideration. Couple that with the data you’ve gathered on property taxes and rental rates, and you’ve got yourself a solid investment plan. For the most part, the municipal planning department in your area will have helpful information on any new zoning and development plans. One way to go about this is by looking around the neighborhood and nearby areas for signs of construction. If a lot of building is underway, that may be a sign of an area experiencing strong growth. Also, worth noting is any new housing developments, which could potentially lower property values for houses in the area. More investors and builders are putting brand new homes on the rental market, which could eventually wind up being your competition.

Vacancies

And, the last thing you need to know is the number of listings and vacancies in your chosen location. Gaining knowledge of this will ultimately help you choose which investment properties to buy. A specific area with a high number of rental homes isn’t necessarily a sign of trouble, provided that the number of vacancies in that same area is relatively low. Nevertheless, be wary of unusually high numbers of unrented properties, as this might be an indication of a neighborhood in decline. Whenever there are plenty of vacancies, you’ll see the rents lower as landlords compete for tenants. If your rental rate dips below your ongoing expenses, you may end up losing money.

In Conclusion

While doing research on every potential income property is a lot of work, Real Property Management Champion 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 910-782-4488 to learn more!

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