Any investor who decides to venture into rental properties should know precisely the potential for anything they buy. Unfortunately, short of a crystal ball, there’s not often much to go on.
How does an investor make an informed decision on which property to buy? What should an investor buy that has the highest return potential? Learn the answers to those questions and many more from NRIA. Until then, here are ten signs of profitability that any investor can look for.
Table of Contents
1. A Healthy Neighborhood.
A rental doesn’t have to be in a neighborhood that looks like it popped out of a Norman Rockwell painting to be profitable, but it should still be reasonably healthy, with nothing like boarded up windows, yards dotted with “For Rent” signs, and other signs of trouble.
2. Lots of Amenities.
What features does the neighborhood have? These might include parks, gyms, shops and restaurants, public transportation, and more. The more a neighborhood offers residents, the better the chances are that a rental will stay occupied.
3. A Garage.
Anytime a rental offers a garage, it’s natural to ask for more rent. A garage is something a tenant will value highly.
4. Job Growth.
People follow jobs. It naturally follows that wherever there are jobs available, there will be people who want to rent places.
5. Reasonable Renovations.
A rental that needs lots of repairs and renovations will only be a drain on the wallet. There is nothing wrong with making repairs, but too many make an investment a burden.
6. A Good Reputation.
Cities, just like people and companies, develop reputations, with some being good and others not so good. An investor who hears good things about a neighborhood should investigate finding a rental in that area. Likewise, stay away from investing in communities that have a bad reputation.
7. Low Crime.
Good neighborhoods tend to attract a higher caliber of people. Further, when there is a lower level of crime in an area, people will want to relocate there. Lower rates of crime also tend to cost owners less because of fewer repairs. An excellent way to check this out is to visit the local law enforcement agency and ask questions about how much crime is in a particular area.
8. No Flood Zone.
Areas that are not in or close to a flood zone not only cost less in terms of damage should flooding occur, but the insurance rates are lower too.
9. Good Schools.
Families who want to rent will flock to areas where there are good schools. The high value that young families place on good schools in an area means fewer vacancies and evictions.
10. Median Price Range.
Every investor likes a good buy, but good buys don’t always equal good value. Properties that are priced within a few thousand dollars of a median value is a good indicator of a profitable rental investment.
BONUS SIGN—Curb Appeal.
People who rent homes like to know that the place where they live looks good from the outside. Just like most homeowners wouldn’t want to live in an ugly house, renters don’t want to live in a place that is ugly.
These are 11 of the most important signs to indicate that a rental property will be profitable. When an investor does their research into a potential rental property and can check off all or most of these points, the chances are good that a property is worth a closer look. There are other factors to consider, such as the investor’s risk tolerance, but a rental property that meets all or most of these criteria will be a good one.
About Carson Derrow
