Once you determine you want to invest in rental property, you need to make sure that you are picking the right property. If you are a first time investor, the undertaking might be quite daunting. Here are some pointers that you should consider when looking for a profitable rental property.
Aesthetic Value of the Neighbourhood
If you want to have quality tenants for your rental property, you must find a neighbourhood that is of very good quality. Tenants are becoming more circumspect with the type of localities where they prefer to live. They are very observant and they carefully search for a good neighbourhood when they want to move into a new home. They want to know that they are in a neighbourhood that is safe and free from crime.
Invest in Localities with Opportunities
Most people will be attracted to localities that have decent employment opportunities. Before you invest in rental property, you have to take time and go into a fishing expedition that will help you to determine if the area is attractive for prospective employees. The health of the economy always affects the value of real estate and this can be measured by economic indicators. The GDP, employment information, and manufacturing activities are all very good barometers that can help you make an informed decision.
Availability of Amenities
If you want your property rented quickly and want tenants who will stay for long, you must invest in an area with amenities. Safe car parking, for example, is very essential for renters. Renters also look for localities that have good hospitals, health clubs and gyms. You also need to find out if the area you are investing in has easy access to public transportation hubs.
Minimal Number of Vacancies and Listings
Vacancies and listings are a very good indicator of a good or a bad locality for investment. Any place that has an extraordinarily high number of vacancies and listings is probably not a good choice for rental investments. Such areas probably have a season cycle, or the neighbourhoods could have turned unhealthy or unsafe and is no longer attractive for rental investment. If an area has a high vacancy rate, you might have to lower rent to make it attractive and this is cannot be good for investments.
Comparability of Rental Rate and Purchase Rate
Whether you are in the market for a new home or investing in a property for business purposes, you do not want to go for one whose purchase price is quite high yet the rent that it will fetch is too low. A huge difference, more so, on the negative side will mean a lower profit for you, especially in the event that you are paying off loans that you used to purchase the property.
Remember, a property with the above characteristics will increase in value over a period of time. It is a very good investment for the long term and will help you to build your wealth. Thus, never make the mistake of investing blindly and losing your money because of poor decisions.