Are you ready to take the plunge into real estate investing by buying a rental property? With the potential for passive income and long-term appreciation, owning an investment property can greatly increase your wealth. 

But before you get too far down the path of becoming a landlord, it’s important to ensure this new venture is right for you. To help guide your decision process, here are seven critical questions that every prospective investor must ask when considering whether or not to buy a rental property.

Can You Do It Alone?

The first question you should ask yourself before buying a rental property is, can you manage the property yourself? This is a critical consideration to make since it will determine how difficult it is going to be.

If this is your first time buying a rental property or renting out a property, you should seriously consider enlisting the help of a real estate agency. Not only will Estate & Letting Agents In Bangor give you the best pricing for the property, but they'll also be able to collect the rent and do all the paperwork.

What Can You Charge?

This brings us to the next question you must ask before buying a rental property: what can you charge? One of the biggest mistakes new landlords make is charging excessively for the property, which naturally results in no one taking it. 

On the other hand, the last thing you want to do is charge too little, since then you won’t make money back that was spent buying the property in a reasonable amount of time. You should find an agent to provide a rental appraisal and research the price of rentals in the area. 

How Much Competition Is There?

Speaking of rentals in the area, you will need to ask yourself how much competition there is in the area before you buy a rental property. If you are looking for a good return on your investment, it is advised to avoid buying a rental property in an overused rental area.

Not only will it mean that you will need to decrease the rental price, but it also means that you might have difficulty finding tenants with so much competition. 

Who Are You Targeting?

One of the most important considerations you will need to make a crucial question to ask before buying a rental property is, who is your target market? The area you are buying the rental property in will give you a good idea of the target market.

For example, rental properties that are very close to a university would most likely be rented by students. For example, a smaller, one bedroom-home close to the city centre would be ideal for a young professional.

What are You Buying it for?

Everyone has a different reason for buying a rental property, and you need to ask yourself, what are you buying at the rental property for? The two most common reasons for buying a rental property are capital gain and rental return.

If you are buying the property for rental return, you need to ensure that it will increase in value so that you can buy again relatively quickly. The same can be said for capital gains so that you can profit from your investment when reselling.

Are There Developments Nearby?

Another important question is, are there any developments nearby? Developments nearby could either be a blessing or a nightmare since they could either raise the property's price or lower it. Before buying the property, you will need to find out if there are any developments nearby or if any developments are planned.

What Condition is the Property in?

Finally, the last question you should ask before buying a rental property would be what condition the property is in. Some landlords purchase rental properties to give them a makeover, then either resell them for profit or rent them out until their investment has been paid off. 

You need to decide if the property's condition is right for you; in other words, if you are willing to rent it as it is or spend some money to renovate it.