A rental property is a viable investment option that offers you long-term financial benefits if you make the right choices. If you plan on hiring a property management service for your property, your investment range is limitless. However, if you want to manage your investment actively, you’ll be limited by your proximity to the property.
Knowing what makes a property investment-worthy helps you avoid unprofitable rentals. Consider conducting market research to identify the qualities you’d like in your investment rental property.
Here are the Features of a Profitable Rental Property :
The Right Location
The location of your rental property will significantly impact your income. It will determine how much rent you’ll charge and the running costs involved. This helps determine your property’s cap rate to help you look at the initial yield of the property and the risk associated with it.
You should also determine the kind of renters you’ll attract and the vacancy rate. The ideal location should also have further plans for growth and development. A large employer within your property’s reach will give you access to valuable tenants. The correct location for your rental property equals steady profits.
Availability of schools
When looking for a rental property to invest in, determine the schooling opportunities around because this is one element families look at when renting houses. If your property is near quality schools, it will attract renters from working-class families, ensuring high-quality tenant applications and low vacancy rates. This also allows you to charge premium rents for maximum rental yield.
Low crime rates
Consider looking at the crime statistics of the area you intend to invest in, including vandalism rates and severe and petty crimes. Don’t forget to confirm whether crime rates are declining or going up.
Your tenants’ security should be of utmost importance if you’re looking for long-term success in the real estate sector. Investing in a low-crime area will ensure low to no vacancy rates, ensuring steady cash flow and increased profits.
Low vacancy rates
Vacancy rates in your area of investment will impact your rental income. If you observe that the area experiences high tenant turnover rates during particular times of the year, it could be seasonal. Seasonal vacancy rates don’t necessarily mean that the property isn’t profitable. It only means that tenants shift during that period.
However, if the area experiences constant high vacancy rates and a lot of vacant property listings at odd times of the year indicate that it’s not profitable, consider investing in areas with low vacancy rates even during seasonal shifts. This will ensure high profitability as you are assured of steady income even during shift seasons.
5. Continuous development
Before buying a rental property for investment, check with the municipal planning development for information on development programs for the area. If you notice ongoing construction within the area you intend to invest in, it signifies growth which is a sign of profitability in the long term.
Don’t forget to look for developments within the area that could potentially harm the value of the property you intend to invest in.
Given the considerable upfront investment required for real estate, doing your due diligence before investing is crucial. Consider looking at the above features to determine the rental property’s profitability you intend to buy.
The rental business can be profitable if you know how the system works.
Read More: How to Start a Rental Property Business