The demand for rental property has never been higher. More and more people are investing in rental properties than ever before as they have learned that the long-term return on income is quite excellent. If you are able to find a profitable rental property, you will have an outstanding investment that can be profitable for years to come. Choosing your investment property is a decision that you should make careful and consider all potential factors. If you choose poorly, your rental could end up costing you instead of becoming an investment in your future.
Know All About Your Property
The first thing to consider is the type of property you would prefer to invest in. You need to know what kind of property you are willing to take on and what you can afford. There are many different options to choose from; condo, multifamily home, single-family home, or even a larger apartment building. Be sure to look at the bigger picture and all the factors that come with each type of property.
Next you need to think about who your ideal tenants would be. Also, consider if you would need the services of a property management company for your rental. Many property owners choose to utilize a property management company to simplify the process and make taking care of every aspect of the property streamlined. Think about why you are buying this property and what you hope this investment will do for you.
After you make that decision, you should narrow down the neighborhoods and areas you would like to consider for your rental property. Then, consult with a licensed and professional broker to help you find the best profitable rental property.
Here are some tips to identify which property will provide you a good return on your investment:
Consider the Neighborhood
The quality of the neighborhood will substantially impact whether your rental property will stay occupied or sit vacant. Keep in mind that vacancies equate a loss in cash flow and will greatly impact your return on investment. Take the time to research the neighborhood and visit the area to ensure it will attract the tenants you hope to have. Some neighborhoods that may appear bad at first glance can actually be great investments – as long as the area can be said to be improving. Check out local selling prices to get a sense of local market value, and look into the average rent in the area to determine if it is financially feasible. Properties in declining neighborhoods may not attract quality tenants and could even be the target of vandalism. Look into crime statistics for the area as well. You may notice that tenants in this area have a higher rate of eviction
Employers and Schools
Check out the local employment opportunities in the area. This could tell you what potential tenants will do for a living, and what their lifestyle will be like. If high paying employers are in the area, your rental property may produce a higher rent. Likewise, if there are quality schools in the area, many families and young couples looking to start a family will seek out a rental property in the neighborhood to ensure their children attend a high performing school.
Attractions and Amenities
If the area has a decent mix of dining, accommodations, entertainment, shopping, etc., a prospective tenant may be more inclined to choose the area based on the options available. Take this into consideration when searching for the right property to invest in.
If the property you’re considering is in an area prone to flooding, or other disasters, you may want to avoid purchasing property in the area. Especially if you are new to investing. If you’re spending all your money trying to recover from property damage, you have not found a profitable rental property and your ROI will suffer.
Condition of the Property
You may choose a property that is in need of some work. In doing so, you should expect to experience a period of vacancy until the property is suitable for tenants to move in. Keep in mind that different areas and different types of property will attract tenants with different definitions of what it means to be “rent ready.” Some properties that are generally in good shape may still need updates in order to become profitable rental property for the area. Look at property taxes in the area – if property taxes are increasing in the area, this can become a significant expense for you. You truly must consider all factors before making the decision to invest. Remember, the best protection for your profitable rental property investment is a quality property management service. Let the team at YesiRent provide you with the most comprehensive property management service you can find.