Features of a Profitable Rental Property
Investing in rental properties is quickly becoming one of the most popular ways to get into the real estate market. These investments will allow you to make passive income by renting out the home to others. It is generally much more stable than other types of investments and can offer you a great return.
Investments in rental properties are becoming more popular and for good reason. However, it is far from a slam dunk. Investing in real estate of any kind is risky and requires a lot of cash or a mortgage. One of the best ways to ensure you get a solid ROI is to know the features of a profitable rental property. This article is going to take a look at some of these features to help you know what to look for when purchasing a rental property, and what renters like.
1. Is it Located in a Safe Neighborhood
Security is incredibly important during real estate investing, especially for rental properties. Few people want to live in a dangerous or crime-filled neighborhood, so you might have a hard time finding reliable and quality tenants if that’s where your property is located. If you are able to secure clients, it will likely need to be for a lower rent.
Sure, it is cheaper and more economical to purchase a cheap home in a bad neighborhood, but you might have been better off paying a bit more to get in a decent neighborhood in order to command a higher rent.
2. Ample Space for Parking
In most cities across the country, parking is a huge concern. There are so many people in such a small area in most cities that parking can be a mess. With parking being restricted on many streets, it can be tough to find somewhere to both safely and legally park your car.
Parking will likely be a large concern of your tenants and having either ample legal street parking, or better yet, a dedicated parking spot could go a long way in commanding more rent. If your property isn’t in a neighborhood where many people drive, then you should at least be located fairly close to transportation options like the bus or subway, to help make travel and commuting as easy as possible.
3. Close to Amenities
Rental property investments thrive on the amenities that surround them. A home itself can be beautiful and gorgeous, but if it’s in the middle of nowhere, it will likely command less rent than a tiny studio that’s close to amenities like shopping, restaurants, gyms and doctors’ offices. As a result, a rental property that you purchase should be close to all of the places people go to most.
In addition to the amenities mentioned, it is also a good idea for the rental property to be close to good schools, playgrounds and parks. This will help up the chances that a family will rent with you, and some research has shown that renting to families can actually be better than individual tenants.
4. In an Area with Low Vacancy and Fewer Listings
The main goal you have with your rental property investment is to always have tenants living there. However, if your property is in an area with hundreds of listings, you will have a lot of competition and will likely have to take a lower rent in order to actually find tenants.
Instead, you should look for an area with fairly low vacancy, so that your property will get attention and be desirable, seeing as it will hopefully be one of only a few in the area. It could be tough and/or expensive to find these locations in desirable areas with low vacancy, but it could be worth it with how profitable your property could be in those areas.
5. Acceptable Rent and Property Taxes
When you are renting out your property, the rent you collect every month is one of the most important factors in whether your investment is profitable or not. As a result, how much you choose to rent out your property for is a big choice to make.
You don’t want to charge too little, but you also don’t want to charge too much. You need to look at rents in the area, and then compare how your property is compared to others. In addition to thinking about the tenants, you also have to make sure the rent you charge works for you.
You likely want to be able to more than cover your mortgage with the rent you get, but don’t forget about other expenses such as property taxes. Speaking of property taxes, you should try looking for an area with favorable property taxes as the more you will be charged in property taxes, the less you will profit each month.
In conclusion, we hope that this article has helped you learn and discover important features that can make or break the profitability of your rental property.