Real estate can be a great investment to diversify your portfolio and protect against an unpredictable stock market. But if you’re looking for a rental property that will help you bring in extra income, where do you begin in choosing a suitable property?

As with any investment, the first step is deciding how comfortable you are with risk. Buying a comfortable home in an upper middle class neighborhood is almost always a safe bet. It appeals to a certain kind of tenant and is likely to be easy to rent. But you might be able to make more money by investing in an up-and-coming neighborhood, just on the verge of becoming the next hot location, where you can buy for a song and then slowly increase the rent as the neighborhood rises to prominence. Another more lucrative but more risky choice is to buy in a college neighborhood. You’ll almost always have a string of buyers, but college kids can be destructive. It’s all about balancing risk and reward until you’re comfortable with what you have.

Before you buy a property, you’ll want to sit down and do some hard math. What are your mortgage payments? How much will you need to charge in rent to break even, after taxes and property management fees are removed? How much profit do you hope to make? What kinds of improvements will you need to make on the property before it’s ready to rent? Make sure you go into real estate investment with clear expectations about how much you can really earn.

Finally, don’t go into this alone. Work with an experienced Indianapolis property manager like Dan Baldini and the Polaris Property Management Team. They’ll work with you to help you select, buy and rent the property that’s right for you and your portfolio. More questions? Call us today.