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The United States has made a drastic progress in personal property sector. Real estate business is highly flourished when it comes to housing. Reason behind this is, after the fall of Federal Reserve in 2000-2001 and again in 2007, it was difficult to revive the market. This is why many laws and interest charges were reduced since 2008 on property.

People in the States are taking advantage of this and investing more in real estate. To ensure a proper investment, there are certain guides to be followed. If you are planning to get a rental property, you should be aware of few things beforehand.

Just because you won’t be living in the property, it is more important to have a proper background check. To whoever this house or apartment will be rented, they will not be liable for anything. So if you are investing in a new real estate property, the following things are very crucial:

  1. Market research

First and foremost thing before buying any property is an extensive market research. It is crucial to know about the rates and taxes charged presently on personal properties.

  • Check the neighborhood as you would like to settle.
  • Check the rating of the location. The properties are rated from A to F and price is set according to that.
  • As per Federal Reserve, there has to be a 3.5% of down payment
  • Make sure of a good transportation facility.
  • Avoid low security locations even if the prices will be low.

No matter how small these issues might sound, these are practical things one should look for when planning to invest in a property.

  1. Pre-planned budget

It is absolutely paramount to make a budget before planning for a property investment. The budget will help to filter area and will shortlist many things. With this, one can get a clearer idea.

How to make a pre- planned budget?

  • Get approval letter from bank for the amount of mortgage loan you are applying for investing
  • Apply for an amount so that the interest fits your pocket.
  • Make sure you are not already tangled into other loans.
  • Tell realtor about the amount you are willing to afford beforehand.

Benefits:

  • You will be only seeing those apartments or locations as per your budget. This will save lot of your time.
  • Sellers and dealers will take you much more seriously.
  • You can confirm the property as soon as you like it.

 

  1. Don’t let low interest rates lure you:

While investing in a property there will a lot of bait traps. Make sure you know how to avoid them. If the property is being sold at unbelievably low value, these are the following things you need to check:

  • Check the flooring. Price varies as per the material used for flooring. It’s better to opt for marble or tiles flooring of good quality. If it is of granite, the durability is questionable.
  • Always make an estimate of the re-sale value.
  • Properly keep an eye on power and water supply.
  • Know about the groundwork.

Get an official inspection done before deal is confirmed to avoid any further issues. If you are to invest it in rental then make sure all the works are done beforehand. No one will like to spend money on interest as well as repairing charges. This way, rent won’t be an extra earning, rather an extra burden.

  1. Housing tax:

Paying tax is an important thing, but paying extra tax is not required. Before investing in a rental property, make sure you have original papers of that property and updated housing tax file. If clearance to tax is due, first resolve the problem before you seal the deal. Remember, it is going to be a rental property, so the bill will come in owner’s name. To avoid any kind of mishap, it is very important to take care of all unclear and pending house taxes.

Places and there housing tax:

  • New Jersey: 2.38%
  • Illinois: 32%
  • New Hampshire: 2.15%
  • Connecticut: 1.98%
  • Ohio: 1.55%

 

  1. Background check of the tenants:

It is very important to know whom you are renting your property. While they will live in your property, if anything goes wrong, the owner will be facing all kinds of hustle. Things you need to know for avoiding this:

  • Get their original ID proof.
  • Check why they are renting an apartment.
  • Make sure they don’t have criminal record.
  • Always do proper legal work before handing over the property.

How to plan rent charge accurately?

If you are investing in a rental property, you also need to make sure that after paying the mortgage interest and housing tax, you are left with marginal amount of profit.

For example: Suppose you have a 30 year of mortgage loan. Rate of interest in US is 3.34% currently and housing tax is around 1.29% to 1.68%. Average rental price in US for 2 bedroom apartment is $1000 to $1290 USD. Calculate the value accordingly to invest that amount which you can retrieve from the rent.