Successfully investing in rental properties requires a careful assessment process. Even though rental rates are a vital part of analyzing any property’s potential, there are plenty of things beyond rental rates that have to be considered too. Profitable rental properties tend to share a number of common features, aspects that help maximize their value and earning potential. Beyond rental rates, the five most important things to look for in a rental property are appreciation potential, future development, property taxes, the number of rental listings in the area, and the local vacancy rate. By including these five things in your rental property search, you will boost your chances of having a successful rental property investment in Breezy Point County.
Appreciation Potential
The current value of any potential investment property is the top priority for most investors. But perhaps equally important is a property’s potential to appreciate over the long term. Real estate investment is designed to build wealth over the years, even decades. For this reason, it is essential to look at potential investment properties through that lens. Properties that are located in areas that are growing or undergoing revitalization may be good candidates for strong appreciation in value, as are properties in areas that consistently offer good employment and other opportunities.
Future Development
The next important aspect to consider when searching for a rental property is the area’s potential for development. An area with a lot of new construction may severely impact existing property values, either by increasing or decreasing them. When studying a rental property, it is important to take in information about any plans to develop or renovate homes or other structures in nearby areas.
Property Taxes
Together with the impact of future development, an area’s current and future property taxes are one more important thing to research. High property taxes are not automatically a reason not to acquire the property, primarily if the house is located in a highly desirable area. In the same manner, low property taxes may be a sign of declining property values or even a temporary feature, if the property is located in a developing area. To be a bit more specific, homes located in the developing areas may experience sharp increases in property taxes as the city or region requires more services to meet the needs of a growing population.
Area Rental Listings
The number of rental listings in any particular area is an essential factor in assessing an investment property’s potential. If the neighboring area has a high number of rental listings, this could be an indication of a strong seasonal cycle or perhaps even evidence of a community in decline. An ideal rental property is located in an area with strong demand, which often correlates to a relatively low number of available listings at any given time. So, notwithstanding the number of rental listings, it is important to investigate as much as you can about the area before pursuing an investment property there.
Vacancy Rates
Just as a high number of listings is a reason to inspect more, so are high vacancy rates in the area. The more rentals that are available, especially if the number of rentals has exceeded demand, the lower rents must be to attract quality tenants. If rental homes are standing empty for weeks or even months, that is a probable sign of a saturated market. Alternatively, low vacancy rates could correspond to higher rents, allowing you to maintain a profitable investment.
In Conclusion
When searching for investment properties, it’s important to take a comprehensive view of each property’s potential. By including these five aspects of your search, you can more easily determine whether the rental property you are considering is right for you.
At Real Property Management Deluxe, we have a dedicated team of Breezy Point County property managers who will help you with this determination process and make your search more efficient. Our professionals are there to assist real estate investors through an array of quality services, offering our market expertise and data to ensure that your next rental property will help you come one step closer to your long-term investing goals. For more information, contact us today!
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