Buying a rental property could prove more challenging than buying a home for yourself. This is because you’re not just looking for a lovely home, you’re looking for a piece of property that’s going to bring in profit. The property you choose needs to attract the right kind of tenants and bring in a monthly rent that covers your costs and reaps a profit as well.
Being smart and not jumping into the first rental property you see is key to finding one that meets all the requirements listed above. The tips below will help you find the perfect profitable rental property.
1. Do A Thorough Search
The perfect property that meets all your requirements does exist, so don’t get discouraged when an initial search turns up less-than-desirable properties. You can hire a property consultant to search available rentals but try to do some of the searching yourself, so you learn the market well. Don’t be so quick to jump on a property just because your consultant says it’s the right one. Trust your instincts and use your own judgment when considering a deal.
2. Location Is Everything
When buying a rental property, its location is everything. Don’t buy a rental that’s located in a high-crime area – no one wants to live like that. Look for a community with a quality school system and try to choose a property that’s close to an abundance of work opportunities. Lastly, a property close to amenities like parks, entertainment, and public transportation tends to attract plenty of prospective tenants.
3. Pay Attention To Supply And Demand
Check rental listings in a given area to determine the supply and demand ratio for rentals in that area. If there is a high demand for rentals, it could be a seasonal thing that could leave you at a loss during off-season months. If there is an unusually high number of rentals available, the competition could cause landlords to lower their monthly rents to attract tenants.
4. Know The Going Rate For Rent In The Area
Find out what the going rate for rent is in the area you’re looking to buy. Is this amount enough to cover all your costs plus give you a profit? If not, continue searching.
5. Know What The Future Holds For The Area
Before deciding on a rental property, visit the Municipal Planning Department to find out if any major developments are in the works. New shopping malls, parks, and other amenities will attract prospective tenants to the area. Be leery of condos and other mass rental properties on the horizon, however, as they may be stiff competition in the future.
If you are thinking of getting into rental property investing, be sure to consider the tips above as you begin searching for a property. Remember, the right property is out there. You just have to know what you’re looking for and how to find it.
