Rental properties are some of the most profitable real estate ventures that you can invest in. You can find the most appealing real estate residential properties and turn them into rentals for a continuous stream of income. The real estate business is highly competitive. Therefore, you should do your research in order to have a profitable rental property.
Here’s a list of the top 10 features that can potentially make your rental property profitable.
Take note of the costs that come with buying and renting out a home wherever that may be. You should research the property taxes in the area and any probable fluctuations beforehand. Often times people assume high taxes are a bad thing, but that isn’t always the case. The neighborhood could be in a great area or highly desirable. Therefore, you will attract more renters who are willing to pay more and stay longer.
However, there are some locations that are unappealing and have high property taxes. An area like this probably wouldn’t be a very good idea to rent in since average rent prices will likely be lower and not enough to cover all your expenses.
What kind of neighborhood you go for will determine your property’s vacancy rate and how much rent you can charge. For example, you buy a rental property near a college or university. The chances of students or teachers acquiring your rental is much higher than other individuals. Therefore, you may experience vacancy issues during the summertime when school is out.
As stated above, if you buy in a highly desirable area, ideally you’ll be able to charge more for rent, which can result in higher profits.
Do your research on the area to determine the type of renters you may get and how much you can charge. Creating a lease agreement that includes summers can address some of the issues with filling vacancies if you’re in a college town.
Make a list of perks that can make your rental property profitable. Following that, you can tour the neighborhood or look up the local attractions online. These perks can include parks, public transportation, restaurants, movie theaters, or gyms.
The more amenities and attractions near your rental, the more you’ll be able to charge for rent.
If there are good schools around your rental property, the higher your resale value will most likely be. While there is no guarantee, you should focus on acquiring family-sized rentals if there are schools nearby.
If the schools nearby aren’t desirable then this could impact the value of your property.
Research the area’s average rent to see if the rental income would be enough to cover your expenses and put extra money in your pocket. You should take into consideration your mortgage payments, utilities, property taxes, and other bills. If the rent you collect isn’t enough to cover your monthly expenses, then it wouldn’t be a good investment idea.
You need to take into consideration the natural disasters that occur in the area, such as hurricanes and flooding. Getting the necessary insurance to cover these disasters will eat away at your overall profits.
Contact your municipal planning department because they’ll have information on any development plans in your area. If the location is up and coming or there’s a lot of construction going on, then that indicates a good growth area.
However, you’ll need to be aware of new developments in the area that could hurt local properties’ home values. Also, new developments create new competition.
Go through the crime statistics in the areas you’re looking to buy in. You should try to purchase rental property in an area with a reasonably low crime rate. No one wants to dwell in a criminal hotspot.
You can find this information at your local police department or sites like Neighborhood Scout or AreaVibes.
An area with growing employment opportunities will attract more people to your rental property. Check out the U.S. Bureau of Labor Statistics site to see what areas have high job availability.
Having good businesses near you will boost your property’s value as well.
An extensive amount of rental property listings in an area indicates a seasonal rental cycle or a neighborhood in decline. In these cases, people have to lower what they charge for rent in order to attract people.
To make your rental property profitable, you can look for localities where the rent is high and vacancies are low.
Now you know about the 10 most important features that make a rental property profitable. Once you buy the right real estate, you can potentially generate an endless source of income from it.