Six Red Flags for Rental Property Investments

Rental properties are a great way to expand your investment portfolio. There are numerous details involved in real estate investing and, as with anything else, there are no guarantees that a deal will be profitable every time. There are, however, a few things to watch for to help ensure that your investment a successful one.

1. Potential Income Delays. When selecting a property, look for one that is going to provide a perpetual income, rather than one that could have a big payoff at some point in the future. After all, you are purchasing it as an income investment; you want to be sure that it will bring in a steady income.
2. Too Costly Up Front. If the property is going to take a lot of money up front to get it ready for tenants or if during the bidding process there are multiple offers, causing the price to increase higher than you what you had budgeted for, it may not be the right investment.
3. Lack of Documented Information. If the seller cannot provide you with specific details for previous rental rates or year over year profits, you should definitely question why that is, before making an offer.
4. Bad Location. You’ve heard it before, location, location, location! If the property is in a bad neighborhood, i.e. property values are decreasing, it has a bad reputation or a high crime rate, you may want to pass. Even a good rental property in a bad location can ruin your chances of the investment being a profitable one.
5. Development Deals. Development deals come with a whole different set of rules. If you are unfamiliar with them or do not have an experienced partner or team, it’s better to pass and leave the higher risk deals to people with experience in them.
6. Out of the Country. Again, unless you have experience and extensive knowledge of the other country’s property laws, legal system, and currency fluctuations, leave those deals for someone more experienced in them.

Rental properties can be profitable investments when you do your research and invest wisely. As with all investments, do your research before you become too invested. If you have questions or are looking for private funding, we can help. Contact us at info@vintagerealestatefund.com. We would love to assist you in your new investment project!

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Amter, Bob. How to Know When to Walk Away from a Real Estate Deal [Blog]. Retrieved from http://www.montegra.com/blog/how-i-made-money/walk-real-estate-deal

2018-04-05T16:24:18+00:00