Young professionals especially those who belong to generations called Millennials and the Gen-Z are becoming more and more conscious of spending their hard-earned money. And although there are more ways than just one job to earn an income, they are mostly convinced that nothing beats investing in rental properties and real estate. But most people are unaware that real estate investing encompasses a much broader range of investment vehicles than they are aware of. This ranges from the very passive strategy of purchasing stocks related to real estate on a public exchange, investing in Real Estate Investment Trusts (REITs), or even investing in deals through a real estate crowdfunding platform, to the more active approach of buying individual properties directly — either to resell them for a profit, or to rent them out for ongoing income.
Renting a property is one of the most common practice when it comes to real estate investing. Why? Simply because there was a rise in the number of mid-income families who want the convenience and perks of living in the metro. It is one of the main reasons that drove up the demand for condominium and apartment rentals in the last few years. Investors took advantage of this growing trend and doubled down on the purchase of these residential units for the sole purpose of rental income. But how do you know if there is a rental possibility for your property? We got you covered! The following list gives you an idea if your property is ready for rental investment.
LOCATION
How well a rental property will perform financially is greatly influenced by its location. It determines not only the value of the property but also the rent you can charge. That is why you must thoroughly investigate the neighborhood in which the property is situated.
- How is your neighborhood?
- Is it secure? Is it a walkable distance?
- Is it suitable for children?
- Are there facilities available to meet the needs of potential tenants?
A good rental property is in a safe neighborhood, close to public transportation or highways, and near good schools, health facilities, shopping centers, parks, and recreational areas. If you’re considering an Airbnb rental strategy, rental properties near tourist attractions make excellent investment opportunities. Overall, the more amenities surrounding a property, the greater the likelihood of charging a higher rent due to the desirability of the area.
PHYSICAL FEATURES
The amenities that a building provides are essential for luring tenants. Tenants appreciate having access to some type of outdoor space, such as a balcony or yard. Rentals with at least three bedrooms and two bathrooms are preferred by families with children. Parking is an important feature for tenants who own cars. Many renters who want to avoid spending time at the laundromat require an in-unit washer and dryer. It’s a big plus if a rental property has a gym or a pool. Keep in mind that the more amenities a rental property has, the better. You can then charge your renters more.
PROPERTY CONDITION
Many property investors undervalue the potential impact that a property’s condition can have on their investments. You don’t want to purchase a damaged property and then spend all of your rental income on repairs and renovations. So, have the rental property inspected thoroughly so you can get a sense of its current state and condition. While performing a home inspection on your own, it is not always possible to notice all of the flaws. That is why it is advised that you hire a professional to conduct the inspection.
SAFE NIEGHBORHOOD
Nobody desires to reside close to a crime-ridden area. Neighborhood crime statistics should be available from the local police or the local government unit. Check the rates of vandalism, serious and petty crimes, and keep track of whether criminal activity is increasing or decreasing. You should also inquire about the frequency of police presence in your neighborhood.
CONSIDER YOUR LOCAL REAL ESTATE MARKET
The next step in determining a good rental property is to gain a better understanding of the local real estate market. Examine the vacancy rates in the surrounding area. You should seek out areas with lower vacancy rates. Low vacancy rates indicate a high demand for rentals, and as a result, you won’t have to worry about going long periods without earning any rental income. Furthermore, low vacancy rates indicate that you will be able to charge more because the area is in high demand.
KEEP UP WITH THE LOCAL ECONOMIC TREND
Knowing the economic trends in the neighborhood can help you predict how the income property will perform in the future. Conduct some research on the property’s surrounding area to see if there is room for expansion. Are there any new developments on the horizon? Are there any revitalization projects underway? Are new public transportation lines or major highways being built? The municipal planning department will have information on existing developments or plans for the area. If there is a lot of building going on, it is most likely a good growth area. Keep an eye out for new developments that may lower the value of nearby properties. New construction may also compete with your property.
CONSIDER THE LOCAL REGULATIONS
It is essential that you research all laws and regulations that might apply to you as a landlord. Each community has its own set of requirements for landlords, which can vary from one area to the next. Make certain that the rental property you want to invest in is in a landlord-friendly area, meaning that the laws are favorable to landlords. Check to see if the city council has imposed any rental restrictions. The laws governing short-term rentals must also be taken into consideration if you are thinking about using Airbnb as a rental strategy, so be sure to look for locations where doing so is permitted. Examining all of these rules will assist you in avoiding potential infractions and fines.
BE KNOWLEDGEABLE WITH YOUR PROPERTY TAX
Before purchasing rental property, you should understand how much tax you will be required to pay. In fact, once you know how much money you’ll lose to taxes, you’ll be able to more accurately project your returns. You’ll want to look for areas with low property taxes so you don’t spend all of your rental income on property taxes! However, keep in mind that high property taxes are not always a bad thing. A rental property in a desirable neighborhood with high demand and high-quality tenants may be worth the higher property taxes. You can get all the information you need about property taxes from the municipality’s assessment office.
Finding the right property for rental investment can be tricky knowing that the real estate industry in the country is thriving. Yet usually, a single-family home or a condominium is usually the best investment property for beginners. Condos require little maintenance because the condo association handles exterior repairs, leaving you to focus on the interior. However, condominium has lower rents and appreciates more slowly than single-family homes. On the other hand, long-term renters prefer single-family homes. Families or couples are sometimes thought to be better tenants than single people because it is assumed that families are financially stable and pay their rent on time. To help you narrow down your options, try to check out the properties offered by Bria Homes. They have everything to offer from low-cost condominium to affordable housing that would fit your budget.
Written by Noelyn Kate O. Cabrera
