Buying a good rental property calls for a huge investment, and you need to put in a lot of research and efforts to make sure that your money is put to profitable use. Evaluating profitability of the property can be a daunting task, so here are some tips to help you make a sound purchase decision.

Location matters
You must do adequate research before you decide on investing in a particular rental property. It should not happen that the costs turn out so high that it becomes difficult to recover your investment through rental income. A good starting point would be to find out the average rental rates, the number of people seeking rental accommodations, and the general reputation of the locality in terms of crime rates and similar factors.

History and background
It always pays to check the property records to get a better insight into its history. These records can be easily obtained from the relevant authorities in your state. You will get to know the details such as annual property inspection reports, critical maintenance issues, unauthorized changes made to the rental property, and other important details that can have a bearing on your investment.

Also, try to find out the number of hands the property has changed, and for how long did each of the owners possess the property. You must also find out about any pending foreclosures or liens marked on the property.

Maintenance costs
Every year, you will have to spend a certain amount for the maintenance of your rental property. You must figure out this amount before you actually invest in the property to determine the total finances that you would require, and whether or not you can actually afford the cost.

There are several property investment calculators available online, which can help you find out the fair price of the rental property you are planning to invest in. This will ensure that no seller or broker is able to fool or con you into buying a property that is worth less than the asking price.

Annual investment costs
You must plot your annual expenses, and compare them with the expected annual earnings from the property. This will give you a clear picture of whether or not the property is worth an investment.

Profitability
The foremost thing that you need to consider is that whether you will be left with some profits after paying off all maintenance costs and other expenses. Some properties have a better return on investment than others, so calculate the expected profitability of all properties that you evaluate for purchase.

If you are looking for any advice related to purchasing a rental property or need an expert to manage your rental property, you can get in touch with Real Star Property Management team. We are available at (254) 935-2392 or in person at our office locations, 1506 Paseo Del Plata, Ste. 200 in Temple, TX, and 3901 E. Stan Schlueter Lp., Ste. 100 in Killeen, TX.