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Beginner real estate investors wonder how to choose the best rental property. Here are the 6 most important features of a profitable income property to look for:
1. Located in a Top Housing Market
In real estate investing for beginners, it is crucial to choose an income property in a top location. Look for a real estate market with affordable home values and high rental demand. Search for an area expecting significant developments which will attract a strong positive population growth. More people moving in means more tenants, higher demand for rental properties, better rental rates, and higher cash on cash return in real estate.
To learn how to conduct real estate market analysis for buying the best income property, read https://bit.ly/3hjS1dj.
2. Single Family Home
While any property type might make for a good income property, single family homes are best for beginner real estate investors. Rental property investing with a single family home is cheaper, attracts good tenants, generates good rental income, and brings high cash on cash return.
3. Good Condition
As a beginner real estate investor looking for your first income property, choose a home in a good, rentable condition. You don’t want to start your rental property investing business with major, expensive repairs. The sooner you can start renting out your income property, the sooner you will start making money in real estate.
4. Simple Property
Your income property should also be a basic one, without unnecessary amenities and extras. Real estate investing is not the same as buying your own home. Look for a practical, simple income property which is affordable to buy and affordable to maintain.
5. Affordable Price
One of the worst mistakes in real estate investing for beginners is buying an overpriced income property beyond your budget. You should make sure that you have enough cash to buy your property and pay the mortgage payments even if you don’t get rent for a couple of months. Don’t risk getting into a foreclosure for the sake of buying an expensive investment property.
6. Positive Cash Flow
Last but not least, your income property should be able to bring positive cash flow right away. The rental income should exceed the rental expenses so that you end up making money in real estate. Conduct careful investment property analysis to make sure that you are buying a positive cash flow income property.
To learn how to analyze a rental property, read https://bit.ly/2CsIul9.
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