3 Rental Property Investment Tips That Will Help Ensure You Turn a Profit
There are many ways to invest in real estate. Here are some rental property investment tips if you’re entering the real estate investment market for the first time. Know that you’re embarking on a great adventure – and with a solid plan, you can turn a tidy profit on your investment.
The key to a successful real estate investment is choosing the right property. A great property will reap dividends for years to come. Now that you are buying an investment property to rent look for these three features in your next investment property and you’ll have no trouble finding one that turns a profit.
Rental Property Investment Tips
Location: More Important Than You Think
The location of your investment property will be critical in determining how much you earn on it and how long you’re able to keep tenants. And as the saying goes, you can change the color of the walls, you can change the type of flooring, and you can change the layout of the home, but you can’t change the location. So, before you do anything else, make sure your new investment property is in a good location.
Highly profitable properties tend to share certain location characteristics. They tend to be in neighborhoods with great schools and great amenities like pools, parks, movie theaters, and public transit. They also tend to be in an area with quiet, low-traffic, well-kept streets. Great neighborhoods have a low crime rate and don’t mix housing types.
When buying an investment property to rent, it will be tempting to invest in sub-par locations because your cash-on-cash return projections are likely to be higher than those from better locations. This is because the properties are much less expensive and you can buy them with deeper discounts if you negotiate well. The only problem with this is these properties tend to have more repair and tenant issues. These unforeseen issues can eat into your profitability. Additionally, these properties do not appreciate as fast as those in better locations.
Therefore, when buying an investment property to rent, make sure you understand the location and estimate the unforeseen costs that you could incur if the location is sub-par.
Click here to find great locations, motivated sellers and distressed properties
Average Rent Price & Vacancy Rate: Look For Marketability
Aside from local amenities, you’ll also want to consider the average vacancy rate and rent price in your neighborhood. If you can’t cover your costs by charging the neighborhood’s average rent, then the home is a poor investment. There are many different ways to invest in real estate, but having monthly cash flow is a primary rule for all rental strategies.
Check this out, if you are interested in a free rental calculator to estimate your cost to include conventional loans vs. Hard money and refinancing.
Keep an eye on vacancies in the neighborhood. If there are a high number of vacancies in the area, it could mean that the area’s rental market is seasonal or that renters are no longer interested in it. A low-vacancy area will allow you to charge more rent, and you’ll be more likely to find renters.
Floor Plan: Know The Trends And Buy Accordingly
There are a lot of things you can change if you don’t like your home, but the floor plan is a challenge to rearrange. That means in order to make your property competitive on the market, you’ll want to choose a property with a modern floor plan. Watch the trends and buy a home with a floor plan that’s in demand – you’ll have an easier time finding tenants.
Buying an investment property is a great choice for smart investors, but it’s important that you choose a property that will turn a profit. An experienced real estate agent with investment experience can help you find a great new investment property that tenants will love.
So, there are the 3 key tips buying a rental property. For more rental property investment tips stay tuned into this website blog at: https://realestatewaypro.com and subscribe to my newsletter.