From the course: Rental Properties 101
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Specifications of doing your due diligence
From the course: Rental Properties 101
Specifications of doing your due diligence
- [Instructor] For the particular local neighborhood or area which the property is located, here's the information you're looking for to make intelligent decisions after completing your analysis. Vacancy rates. This is simply the percentage of rental units that are vacant or unoccupied. We use this information to calculate the impact of our cashflow, because if the property is vacant, we don't get any rental income. We're looking for lower vacancy rates, which means there is tenant demand for rentals in the area. Lease or rental rates. What is the average monthly rent for comparable properties in the area? Understanding what we can collect helps us determine whether our monthly costs will be covered, like the mortgage payment, taxes, and insurance. Basically, our cash flow. Market cap or capitalization rate. Basically, this is the average rate of return based on the expected net operating income divided by the…
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