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For many investors, the lure of Sarasota real estate is too much to pass up. Unlike stocks, real estate is a very secure investment that is much more resilient to ebbs and flows in the local economy. That´s not to say that real estate investing is collapse-proof, but you usually have a pretty big warning before it happens, and when it does dip, it usually isn´t for very long and it isn´t very severe.
Here are a few useful tips for rental home investing that can help turn your portfolio from red to black.
- Know the area. If you´re buying a rental property that is located in an area that you´re not very familiar with or isn´t near where you live, you had better do some research before you sign on the dotted line. There could be scenarios taking place which might sabotage the property you´re buying before you´ve even had a chance to add a coat of paint. Things like a change in the local zoning laws could completely change the rules about any sort of renovations you wanted to make to your property. The city or area could have just approved a highway overpass that will run 15 feet from the front door of your new property which is going to cause the renters there to flee. Have an idea of what´s going on in the area before you agree to buy anything.
- Or maybe the city approved a mega-mall next door which could be a blessing or a curse, depending on how you look at it. You could lose almost all of your current renters because they don´t want to deal with the traffic, the noise and an expected increase in rent. Or you might want to swoop in and buy the property because there might be a good number of people who would love to live right next door to the new mall. No one knows for sure and that´s why investing, even in real estate, is a Vegas-style gamble.
- Try to find out what is important to renters in that area before you buy any rental property. There are the old standbys like schools, rent prices and location, but there might be other major factors involved, as well, like the amount of noise in the area or access to public transit or even something as simple as security to ward off robberies or drug activity. You may spend your money one way when the whole time your renters would have been happier with it being spent another. Have a firm grasp on what the people in your area want and need in a rental property before you buy.
- Scout local neighborhoods to find out what has been happening to rental property value in an area over the last five years. You can also figure out how occupancy has been over the same period. This can give you great insight on the potential for a profit in a particular area. It is usually only in the movies where a character buys a dilapidated building in the ghetto and turns it into a place everyone wants to live in. Realistically, if an area has been headed downhill and there are little to no signs that things are turning around, you probably want to avoid that area. Even if you think prices have bottomed out and it could be a great deal, if there is little hope in an area, you are likely throwing your money away.
- Don´t forget the Internet and the local media. They are probably the cheapest and fastest way to get a grip on local trends in a particular area. You can use databases like Lexus-Nexus to do detailed research about a particular area´s real estate history over the past 5, 10, 20 years or even longer. The key is to do your homework and using local media and the World Wide Web can save you tons of time.
Investing in the local real estate market can do a portfolio wonders and you can end up being a good citizen at the same time. But you should do your homework before you get yourself involved in anything. If you don´t, you could find out that you bought a lemon of a property and you won´t be able to make lemonade.
GBrey |
