Top 10 Features of a Profitable Rental Property
Your vacancy rates and the tenants you attract will depend on where you live. Many students live near universities, so you may struggle to fill vacant properties every summer. Some towns may impose exorbitant permit fees or pile on red tape to discourage rental conversions.
Property taxes will likely vary across your target area, and you want to know how much you’ll lose. While high property taxes can be a good thing in a neighbourhood with many long-term tenants, there are also unattractive areas with higher taxes.
You can either talk to the homeowners or the assessment officer of the municipality for all tax information. Make sure you find out whether property taxes will rise shortly. In financial trouble, towns may raise taxes to a higher level than what a landlord can charge for rent.
If you are dealing with a family-sized home, consider the quality of local schools. While you are most concerned with monthly cash flow, it is essential to consider the total value of your rental home when you decide to sell it. It can impact the value of your investment if there aren’t any good schools near you.
Nobody wants to live in a place where there is criminal activity. Local police and public libraries should have accurate statistics on crime in their local areas. You should check the crime statistics for your neighbourhood, including vandalism and serious and petty offences. Also, note whether criminal activity is increasing or decreasing. It might be worthwhile to inquire about the frequency of police presence in your area.
The job market
More tenants are attracted to areas with increasing employment opportunities. Check with the U.S. to find out how your area ranks regarding job availability. Bureau of Labor Statistics (BLS), or visit your local library. You can be sure that people will flock to areas where there is an announcement of a large company moving. Depending on what type of business is involved, this could cause housing prices to rise or fall. It is safe to assume that your renters want the same company you would like.
Take a tour of the area and see the restaurants, parks, gyms and movie theatres. Also, look at the public transportation links and other perks to attract renters. City Hall might have literature that will give you an idea about the best mix of private and public property.
Information about developments and plans that have been incorporated into the area will be available from the municipal planning department. There is likely a lot of construction in the area. Be aware of new developments that may impact the value of nearby properties. Your property could be able to compete with additional housing.
Number of Listings and vacant properties
A neighbourhood with a high number of listings may indicate a seasonal cycle or a neighbourhood in decline, and it would help if you determined which one it is. In both cases, high vacancy rates may force landlords lower rents to attract tenants, and landlords can raise rents by having low vacancy rates.
Rent is your primary source of income. It’s essential to find out the average rent in your area. You should ensure that any property you are considering can pay enough rent to cover your mortgage payment and taxes. It is essential to research the area to see where it will be going in five years. A property that is affordable today can mean bankruptcy later if you cannot afford it now, but the taxes are expected to rise.
You will need to deduct insurance from your income, and it is an expense that you must cover. Insurance coverage can drain rental income if an area is susceptible to flooding or earthquakes.
Although official sources are excellent, you must speak to neighbours to get the truth. Both renters and homeowners should be consulted. Because they don’t have an investment in the neighbourhood, renters will be more open about the negative aspects. To see your neighbours live, visit the area at different times and on different days.
A single-family home or a condo is the best investment property. Condos require little maintenance as the condo association handles all exterior repairs, and you can only worry about the interior. However, condos tend to have lower rents and appreciate slower than single-family homes. Long-term renters are more likely to be attracted to homes with a single-family. Because families or couples are financially stable and can pay rent regularly, they are often considered better tenants than individuals.
Each state has great cities, each city has good neighbourhoods, and each neighbourhood has excellent properties. Finding the perfect combination of these three things takes time and effort, and it would help if you were realistic about your expectations when finding the perfect rental property. Also, ensure you have enough money to wait for the property’s cash flow to begin.