How to Identify a Good Rental Property
Find a good location
The first rule of real estate investing: “location location location.” If you are thinking of buying or getting involved as a rental property owner, make sure that you figure out what your target area is going to be. Even though the price, in the end, can be a major factor; it can be worth paying more to be in the right area. Also, don’t cross any particular areas off of your list just because you feel like you would never live there yourself. Keep your eyes peeled and track directions that growth is taking in certain areas because areas that have high population growth are usually the best place to buy. Once you have it narrowed to a few areas, you can do some more specific research on each area in turn. You will want to figure out the median home price for each area. That’s important because it’s advisable to rental property owners to choose an area where the median home price is around 3 to 3.5 times the median household income. Many settle on rental property in St. Geoge Utah because St. George meets all of the criteria above.
Consider tenant landlord laws
Some areas can have local laws that are more landlord friendly, while other areas may be more tenant friendly. A property management team can guide you in the right direciton on that front. St. George Utah can be a great place to invest. And of course, you should always avoid high crime locations. You will make tenant acquisition very hard on yourself if you go that route or don’t do your research beforehand. Some cities elsewhere, just as an example, legally allow for up to 6 months to get a tenant evicted under certain circumstances. You don’t want to get yourself in a situation like that if you can avoid it, especially in property management.
Price – It’s all about the money
Remember not to treat your purchase of a St. George, UT rental property the same way you would treat purchasing your own family home. It’s unlikely that you will find and acquire any ol’ property that happens to be listed. Keep a keen eye out for a really good deal, one that is above average. This is important property management advice. As you probably already know, the majority of homes listed are typically priced at a higher dollar amount than the house is actually worth. One can often negotiate some on the selling price. Make sure that you invest in a property that does not force you to over-extend yourself. Your credit score and debt-to-income ratio will be major factors in figuring out how much you can qualify for if you are looking to finance. It’s also important to remember that you wont have to pay PMI if you put down 20% or more. Some investors insist that saving until you can pay cash is the best advice.
Don’t forget about the house’s condition
Never ever forget to acknowledge what condition the home is in. You must factor into your property costs how much repairs are going to be if any. You don’t need to be exact down to the penny this early in the game, but definitely don’t forget about it. Depending on what year the St. George, UT home you are considering was built, you may need to spend a good amount on upgrades. We’ve included financing in this article even though in some ways it isn’t directly related to identifying a good rental property because it’s so important. A bad financing deal will trickle down and negatively affect so many other aspects of your experience as a person involved in St. George, UT property management, so we felt that is was necessary to include here.
Let’s talk financing
If you are new to real estate investing, please keep in mind that you must go over all details with an experienced mortgage broker prior to choosing a property. As far as the basics, here is some practical advice. If you are taking the typical route and putting down 20% at the bank, then make sure that you obtain at least three different bids. Even the loan officer themselves can be a game changer. Finding the right bank and associate should be scrutinized for sure. Many people choose small versus large banks. You’ll have to decide what you prefer. Many people in property management have reported preferring smaller banks in local communities because they are known to be a lot more unified across their whole customer base and the risk of surprises is much less. It’s advisable to talk to a couple small banks and a couple large ones, just to feel them out.