Rental Property Investment Strategy – How to Pick Profitable Rental Property
Low home prices combined with low interest rates makes this a great time to purchase real estate investment property. But did you know high home prices and low interest rates can still be a great time to buy? This is what many would be investors get stuck on…trying to time the market. Don’t do that, it never works. You need to know the market cycle you are in and adjust your rental property investment strategy accordingly.
Investing in rental property is profitable every time when done right. The key is to buy right. You make your money when you buy right. See my online calculator to help you buy real estate the right way.
How to Pick Profitable Rental Property
The first four criteria of your rental property investment strategy involve items you must consider other than the numbers. The property should have the following characteristics:
- Requires minimal maintenance. After you buy the property, you must have all the repairs done so that it is a near perfect property with no deferred maintenance for the next 3 years at least. Make sure to have newer appliances, smaller yards, an few to no accessories that will cause extra to repair and maintain along the way such as ceiling fans and jacuzzies, and swimming pools.
- Have a repair deductible. This means the tenant will pay for the first X dollar amount for anything that breaks except for a major system like plumbing, HVAC, water heaters, etc. This will effectively eliminate 90% of the calls for maintenance.
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- Attract long-term, well-paying renters. Your goal is to get renters who will take good care of your property, stay a long time and pay on time. Homes around the median price or a bit lower are optimal. While lower-priced properties near colleges may be easy to rent, they typically attract students who tend to be loud, messy and short-term renters. On the other hand, rental properties that are in the highest price range may attract renters who are in jobs that require them to move frequently or who will quickly purchase homes of their own.
- Located in highly-populated, low-crime areas. Steer away from rural areas where there are fewer potential renters. Look for homes in neighborhoods that have low crime rates and good school districts. Neighborhoods near public transportation, grocery stores and shopping malls attract renters.
- Zoned for renting. Always check to be sure the property you intend to lease is approved to be rented by local zoning or home owners’ associations.
- Priced properly. Your purchase price must be low enough to allow you to set the rent within a range the local market will bear and that will earn a profit for you. Be sure to take into consideration every expense of owning, maintaining and renting this property, when considering if you can turn a profit and have a positive cash flow from the start.
Now that you have a rental property investment strategy, it’s time to look for your next investment. Finding a great property is the most difficult part of being a real estate investor. If you want to generate motivated seller lists and find properties you can make profit in check out this software, it is an essential tool for all real estate professionals.For more information on the rental property investment strategy and building your wealth in real estate keep up to date with the realestatewaypro.com newsletter.