Property Taxes
The cost of an income property begins with the sales price but certainly doesn’t end there. As seasoned investors recognize, ongoing expenses such as property taxes could 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. It is significant to have accurate property tax numbers for the exact property you want to buy before making your offer. Most municipalities have an assessment office with tax information on file, with an increasing number of towns now offering this information online. You must, moreover, check local news carefully for any hints of a property tax increase in the near future. Although high property taxes are not always a bad thing, particularly in a location that is recognized to invite long-time tenants, they could probably likewise be an indication of a town in trouble.
Rental Rates
Knowing how property taxes will affect your investment is an essential detail to know when choosing your subsequent property, but also in-depth knowledge of rental rates in your area. A thorough marketing analysis of the location wherein you are planning to purchase surely can aid you to know what the average rental rate is. This figure can then perhaps help you assess whether your expected rate will cover your costs, including the mortgage payment, taxes, maintenance, and so forth. Like property taxes, you’ll want to attempt and gauge where rental rates in the neighborhood may be headed soon. Looking at the recent past may help, as will staying on top of local development projects or shifts in demographics.
Future Development
As you take up and gather your data on property taxes and rental rates, don’t disregard to research any plans for future development in the area. Many times, the municipal planning department in your area will have helpful information on any new zoning and development plans. It is similarly a brilliant idea to look 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. It’s additionally imperative to check off some new housing developments, which could potentially lower property values for current homes that are nearby. New housing could also wind up being your competition, over more and more investors and even builders putting brand new homes on the rental market.
Vacancies
In the end, the fourth essential element to utilize in making a decision in which investment properties to buy is the number of listings and vacancies in your location. A place with a high number of rental homes is not necessarily a sign of trouble, as long as the number of vacancies in that same area is relatively low. In case you are discovering unusually high numbers of unrented properties, though, that may be a warning of a neighborhood in decline. The more vacancies there are, the lower rents will go as landlords compete for tenants. You might, in the end, be losing money if your rental rate dips below your ongoing expenses.
In Conclusion
While doing research on every potential income property is a lot of work, Real Property Management Indianapolis Edge 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 317-420-8500 to learn more!