Deciding to invest in rental property is a big decision. One of the first things you need to do is learn how to select the property that is right for you. You need to find the one that will generate enough income to make your investment worthwhile, but require as little work on your end in terms of functioning as a property manager.

Making a list of the features and criteria that you are in search of will make it easier to evaluate each of the properties that you are looking at and decide which one is the right one for you and what you should steer clear of.

There are a few important factors that are fairly universal for all investors. First, the condition of the property is very important. When you find a property with a price tag that just seems “too good to be true,” then it probably is. There is likely some hidden problem, or multiple problems, and a reason that the price is so low. Experienced investors can often predict the profit at the time of purchasing the property.

Even if you are planning on keeping a property for a long time, you need to be aware of things that may later affect the resale value. Understand what types of major repairs may be required over the next few years, new roof, new furnace, painting/siding, and other types of major projects should be carefully evaluated and the cost of these things should be figured into your cost. While a property that needs work may be a better price, a property that is in excellent condition can be a far better long term investment, even if the price tag is higher.

Do not ever disregard the importance of location. Having a property located on a busy street is not always ideal, especially for families with children. Being close to schools and shopping centers is often important to tenants. A location that offers off street parking is usually very attractive to renters.

Research the history of the property, and find out if it has been an owner occupied property or a rental property. This is important, as often the owner occupied properties have been more carefully maintained and may have fewer underlying issues that could spring up on you later.

If there are already tenants occupying the property, then you need to be aware that their current lease must be honored. Meaning, you are not going to be able to raise the rent until the terms of the current lease expire. There may actually be some local or state laws that govern how much you can increase the rent, so be sure to investigate these regulations as well. Having tenants already occupying the property can be an advantage and a disadvantage at the same time. Often, choosing your own tenants means that they are of the quality you expect, and not qualified by another landlord’s guidelines, which may not be the same as your own.

If you are not able to do repairs yourself, you will have to consider the costs associated with hiring a property manager to take care of them for you. While this is an additional expense, it will also free up some of your time that you would otherwise be spending fixing up your rental property.

Lastly, when reviewing the price of the property, make sure that you include not only the actual mortgage payment amount, but interest, taxes, insurance and any other associated fees and costs that may arise. Be sure that you will be able to cover these costs and still make a profit from your investment.