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Being in a position to purchase a rental home can be a good feeling. The allure of real estate is what attracts most people to the rental ownership industry. Successful investors know how to research properties correctly before committing to a purchase. Taking things slow and learning how to research rental property for sale could help bad investment decisions from being made.
4 Steps of the Property Research Process
Properties that are purchased from private owners, turnkey companies or through banks or other sources must still be researched correctly. Some companies provide a title search as part of the purchase agreement while others do not. Performing independent research using four key steps can provide the information needed to make an informed buying decision.
1. Contact County Agencies
The county where a property is positioned is listed in the county records. These records can include information about tax liens, building permits and previous sales of the property. While each county office can offer different data, reviewing as much data as possible that is of public record is helpful. The more information that can be obtained can lessen the risk of unforeseen issues that can come up after a purchase is finalized.
2. Perform a Title Search
Nearly every state in the United States provides ways that titles to investment properties can be researched. Most companies charge fees to perform searches although the costs can be worth it. The title search can find IRS liens, maintenance liens or other issues that are not listed through public resources. The owner of a property including the original purchase price are portions of the information that is included with an average title search.
3. Know Comparable Sales
The listed price for a property might not giveaway all of the sales information. Comparable sales that are processed by real estate agents, realtors and for sale by owner homeowners can provide helpful information about the value of similar properties. Learning this information can give a better indication of the market value of homes within a certain neighborhood. This comparable data can be used alongside the other financial information obtained during property research. Knowing how much to pay is different than knowing how much someone is asking for a property.
4. Explore Property Tax Rates
Property tax is generally an assessed amount based on the market value of a property. This rate can change annually based on the county budgets that are prepared in advance. Purchasing a home without reviewing the past property tax history can be a mistake as an investor. Not only can past taxes still be due, huge increases in tax rates from year to year could signal problems in the local economy. These issues could affect the market rent charged for a property and other factors that can tap into the amount of income the property can generate each year.