Know the market, know the numbers when investing in a property.
Before you make an offer, research the property, the taxes and the surrounding housing market. Has the property tax gone up in recent years or has it remained stagnant? How does this compare to up and downs in the market? What investments have been made in the surrounding community?
All of these answers factor into how successful your investment could be.
Obtain Property Records
Most seasoned investors spend plenty of time researching the property they are buying. You never want to find something out after you take ownership.
Look at the recent transaction history and read the listing sheets. Go to the local municipal office and see if there were any permits pulled for work to be done on the home. It is also a good idea to take a contractor or someone you trust to offer a second opinion.
Understand The Market
The market usually indicates how successful the property will be. The best properties can sink because of a poor market; however, some of the best deals are gained by buying at the bottom in a growing market. Understand what is going on in the market today and what predictions are for the future.
Look at the area’s sale price history, demographics, unemployment numbers, tax rate changes, population figures and new housing permits. Check out local news sources to see if there are new shopping, entertainment options or a major employer coming to the area. These can be signs of a thriving community, while businesses leaving can signal the opposite.
“This part of the process is too important to just gloss over, or to assume you have everything you need. To make the best possible decisions, you need to know as much as you can about the market you are buying in,” FortuneBuilders advises.
Know The Property Tax
Two main things determine property taxes: the assessed value of the home and the property tax rate for the town or county of the property. While property taxes typically correlate to the home’s value or community value going up or down, others factors such as government taxes and economic conditions can factor in also.
If you plan to renovate, take into consideration that as the value of the home increases, so will the property tax. Updates that typically lead to a property tax hike include adding a bathroom, renovating the kitchen, adding a shed or deck and converting a garage into living space.
Also, realize that any property tax you pay on the investment property can be used as a tax deduction.
No matter what kind of real estate business you are in, you can deduct the property taxes paid on your investment properties, just like you do for your personal residence.