Searching for Rental Property? 3 Important Things to Consider

The current real estate climate in Santa Barbara is providing an opportunity for would-be investors of residential income-producing property. Non-owner occupied rates have remained low and there exists a decent number of local REOs that pencil out when placing 20%-30% down. Here are three important things to consider if you’re in the market for a rental property.

1. Property Taxes – Many first time rental property investors fail to factor in a quality property tax assumption into the monthly cash flow. A safe property tax assumption is 1.125%, but you should always check to see the actual property tax assessment before purchasing a rental property. On a $500,00.00 property using this assumption, your total annual bill will be $6,250, or about $520 per month.

2. Local Rental Rates – Rent for a 2 bed, 1 bath apartment can vary drastically from one neighborhood to the next, and Santa Barbara is no exception. Make sure to research the rates in the immediate area surrounding your rental property and check out websites that pool rental data, such as www.rentometer.com. Consider what the rental rates will be in 5-10 years, as well, and be conservative in your assumptions.

3. Jobs and Schools – Your future tenants need to work and they will likely, at some point, have children. Research the local job market relative to other cities. Look into California labor reports, released monthly, at http://www.labormarketinfo.edd.ca.gov. Also check the school district in which your rental property is zoned. A school district with an excellent reputation will add additional value to your property.

The ZiaGroup is ready to assist you in your search for a rental property in the Santa Barbara area. We can provide you in-depth local knowledge of properties coming to market before they arrive on the MLS. Visit our comprehensive website on Santa Barbara real estate and contact Daniel by phone (805-637-7148) or email (Daniel@ZiaGroup.com).