When it comes to operating a profitable rental property, there are several key features you need to look for before purchasing to ensure you are getting a viable investment. Understanding and being able to identify these features is a sure-fire way to select the best property for your needs and investment goals.
What are these features? Let’s take a look.
Welcome to the Neighborhood!
The neighborhood which surrounds your property is extremely important. It doesn’t matter how gorgeous the home is if the next-door neighbor’s house is a vacant, dilapidated trailer or if the crime rate in the area is so high that you can’t drive down the street without locking your car doors. You should always do your due diligence in researching the neighborhood before you buy, because you can be assured that your tenants will do it themselves.
Work for ItA healthy job market will always attract more residents to the area and new residents need housing. Click To Tweet
You always want to be sure that you are purchasing a property in an area with a viable job market. If the job market is poor, you are not likely to find a long-term tenant who can steadily pay their bills on time. A healthy job market will always attract more residents to the area and new residents need housing.
What to Do, What to Do?
When tenants are trying to decide on a property to rent, they’re likely going to look at the surrounding area to decide whether or not the house is a good fit for them. If they are trying to decide between two or three properties, they are likely going to decide on the one with the best additional features. What this means is, what’s around? Is there a grocery store and pharmacy nearby? What about the nightlife? How many restaurants are close? A property that is in the middle of nowhere isn’t likely to move quickly, no matter how nice it is.
Show Me the Money!
You should always do your research before purchasing any property—but this is most important when purchasing a rental property. In order to make a decent profit from the investment, you need to be able to cover the monthly costs associated with operating the property as well as having a little leftover for surplus costs and some extra in to put in your pocket. So, how do you do this? This is accomplished by verifying that your approximated costs aren’t overbearing and will fit in line with the average going-rate for rental properties in the nearby area. This is where your research comes into play!
Here is another feature that you should be well aware of if you’ve done your research properly. Knowing and understanding the appreciation values in the local market will go a long way in helping you decide where to purchase a property. Choosing an area with adequate appreciation values will benefit you in the long run, if you decide to sell the property down the road for any reason.
Keeping these five features in mind when evaluating potential rental properties will guide you down the right path for a successful investment. While you should always consider other features, such as the condition of the property and the proximity to yourself or your intended property management company, these features are standards and should be present in any property you opt to go with.