Profitable Rental Property – Top 8 Features to Consider

An exciting and very rewarding way to boost your investment portfolio is through investment properties if you make the right choice. However, for a first-time investor, investing in real estate may be quite challenging.

What makes a profitable rental property?

Depending on your specifications as an investor, a profitable rental property may mean something else to you. Generally, investors consider a property as profitable based on its location, proximity to companies and schools in the area, and also the type of amenities in the area, alongside other considerations.

Rental property location: The location of any rental property plays a key role in determining how profitable the property will be to the investor. Location determines the type of tenants you want to attract and the rental cost of the properties. For example, if your target is University students, you may want to consider a property with close proximity to the university campus and at a reasonable rate to attract tenants. You are most likely going to get a great value on your property because the students can easily access the school.

Schools in the area: The quality of schools in the area must be put into consideration, especially if you are dealing with family-sized homes. The chances are that parents would want to put their kids in schools with close proximity to their homes. However, some parents would not put their kids in just any school. The absence of nearby good schools may affect the value of your investment.

Job market or companies in the area: Locations that have more job opportunities tend to attract the majority of job-seeking tenants. As an investor, you can find out what the job market is like in a particular location by checking with the U.S. Bureau of Labor Statistics (BLS) or check with a local library. You can also pay close attention to big-name companies in particular locations, as there are chances that workers will prefer to live close to their workplaces.

Amenities in the area: While some residents are less concerned about amenities, the majority of tenants may give particular attention to the type and quality of amenities in an area. As an investor, you can take your time to tour an area or neighborhood to check out the gyms, restaurants, parks, movie theaters, transport systems, and other attractions. You can also check out City Hall for materials that can give you an idea of the most important amenities a neighborhood can have.

Average number of listing that hit the market: Knowing the average number of listings in a particular neighborhood will give you an insight into predicting the market in a particular location. For example, if a given neighborhood has an unusually high number of listings, it may be a sign of decline or a seasonal cycle. In addition, a high number of vacancies can cause landlords to lower their prices to attract renters and to beat the competition. However, a low vacancy rate allows landlords to increase rents and make their profits.

What homes are renting for in the area: This can also be linked to the number of listings and vacancies in an area. Knowing what other homes rent for in a given area would enable you to arrive at an average cost. You can use the average cost to set your maximum and minimum price levels.

Risk of Natural disaster: Natural disasters are inevitable, therefore, you must have an insurance plan to cover your renters. Some locations are more prone to natural disasters like earthquakes, floods, and hurricanes, while others are not. Whatever the case may be, renters feel more comfortable knowing that there is a backup plan that covers them. The downside to this is that insurance coverage costs is an expense that you will have to subtract from your returns.

Shopping for a lender: When selecting a lender, it is best to have about two to three of them to be able to compare rates. It is important to consider a lender by what they offer in interest rate, loan fees length of the loan, and any other important detail that you need to take note of.

Generally, real estate investment is a high-risk investment with a lot of uncertainties that can affect an investor’s returns. Hence, the need to do proper research on the field before committing your money to it. As an investor, thorough research will help you identify the pros and cons of an investment property. It will also help you determine whether or not a particular investment property is profitable.

Most real estate experts would advise you to take your time to search for a property that settles with you before hiring the services of a professional. The major reason for this is that there are tendencies that a real estate agent may pressure you into buying a property that you may not necessarily like. Doing research before bringing a professional into the picture would help you identify the property that suits you best based on certain preferences like type, size, location, and amenities.