08 Aug What to look for in a potential rental property
The right rental property can bring big investment returns, but you must do your homework to weed out properties that would be unprofitable. Here are some of the top features to look for when choosing your next residential rental property.
The right neighborhood is essential. If you want quality tenants, you need to find an area that attracts renters. This would be a neighborhood that is in proximity to the best jobs, schools, shopping centers and other amenities. Also, you’ll want to check crime statistics for the area. No one wants to live in a crime-riddled neighborhood.
If there is an unusually high number of vacancies in the area, this could be a sign that people are moving out of the neighborhood. The surrounding environment could be “going bad” for any number of reasons, including unemployment, crime or business closings. If there are many choices for renters, you could have to lower your rental rates to compete for business, which would bring down any potential profit you would make.
Look at new developments zoned in the area. You can find this information from the city’s municipal planning department. If there are a lot of new developments underway—malls, parks, apartment complexes, it could mean the area is growing. Of course, new rental unit construction could also mean potential competition. You’ll have to weigh the pros and cons to see if buying in such an area makes sense.
Another important consideration for purchasing a rental property is the potential rental income in the area. What is the average rent for the neighborhood you are considering? If it’s not enough to cover the expense of the mortgage on a new income property, plus the required maintenance and upkeep, you may need to take a pass and move on to the next area.
If you do your homework and find the right rental property, it could be a wonderful way to grow your investment portfolio. Barsh & Cohen covers legal aspects of all things real estate. If you’ve found your next big investment, we can handle the legal details of a transaction. Contact us here to schedule a consultation.