Investing in rental property is consistently one of the best investments you can make. However, getting started in the property investment world can be a challenging prospect. Here are the main things you want to look for in a profitable rental property:
Distance from Your Home
If you are going to manage the property yourself, it is important to get a property close to where you live. The farther your rental property is from you, the more difficult it is to monitor your property, and you will have to invest more time commuting to make repairs, collect rent, etc.
Good Neighborhoods are Critical
Unless you are investing in properties in an area you are betting will turn around, you want to make sure you are investing in a quality part of town. The neighborhood will determine the types of renters and the turnover of your rentals. College areas result in high turnovers for instance while single-family neighborhoods by schools and parks result in more families and fewer vacancies.
Research Property Taxes
Property taxes can take you by surprise, and it is important to examine them carefully. Most places will charge more property taxes for residences that are not your primary residence. So if you are looking for a bigger house and plan on renting your current home, be aware that the taxes on your current home will increase. Check with the town or city’s assessment office to get tax information on file.
Look for Good School Districts
If you are looking to attract more stable renters like families, then having a property close to quality schools is critical. Well ranked schools increase overall home value, which won’t matter until you sell the property.
Check out Crime Rates
The crime level of an area will again affect the type of tenants you will attract, and the amount you will be able to charge for rent. You can use resources like Neighborhood Scout or City Rating to get an idea of the level of crime in a community. It is always a good idea to check with the local police as well to get an idea of how much they have to respond to an area and for what types of crimes.
Research the Local Job Market
A growing job market usually means more people are moving into an area and will be looking for rentals and homes. The U.S. Bureau of Labor Statistics can provide valuable data on the growth potential of an area.
What Amenities are in the Area?
An area that provides a plethora of amenities like malls, gyms, parks, libraries, restaurants, and public transportation hubs will be a great draw for potential renters and can mean fewer vacancies for you. People want to live where there are things to do.
Still interested in being a property owner? We hope so. Check back later in the month for the next blog in the series: What Makes a Good Rental Property? Part 2