Nowadays, many people are considering a long term investment in real estate. The idea behind a rental property is to bring in extra cash. It will be a great way to build your wealth and secure your future. So, make sure to find a property on a good location and renovate it, hopefully for a small amount of money. If you invest in a good and profitable rental property you will create a steady stream of incoming cash. However, most inexperienced people think that only the interior and exterior of the house matters. But they are wrong. There are many other factors that will determine whether your rental property will be a success or not. So, if you are interested in what features define a profitable rental property, keep on reading.
1. Apply the ‘One Percent Rule’
Before you buy a property and start investing in it, ask yourself is that property financially worthwhile. How much will it cost you to build or renovate it? How much monthly rent will you be able to get from tenants? Is it worth it? Make sure to know the answers to these questions beforehand.
Ideally, a profitable rental property is supposed to earn you an annual gross rent of at least 12% of the purchase price. And that is when you have to apply the ‘one percent rule‘. The monthly rent that you are supposed to collect should at least be 1% of the house’s value. If, however, numbers are not your stronger side, you can visit the financial expert to help you determine the capitalization rate. This should help you answer the previously asked questions, and help you determine whether the property is really worth it.
2. Location, Location, Location!
It goes without saying that location rents the property. It is one of the most important aspects you have to take into account before buying the property. So, do your research. You must find a neighborhood that has favorable clients and rates. For example, if your property is close to campus, you will mostly have university students renting, thus, you will earn less. However, if your chosen neighborhood is dominated by the working-class family occupants, you will earn more profits.
3. Safety Comes First
No family will simply call a moving company like bestmoversinflorida.com, pack their bags and move to a neighborhood they know is susceptible to crime. A home you are planning on purchasing must be in a safe neighborhood. Do some researching about crime rates in a certain area before you invest in a rental property!
Crime will not pay your rent. Alt.tag: A police sign.
4. Find a Property Close to Schools With High Ratings
Presence of good schools with high ratings determines whether a family chooses to rent your property or not. This is a key factor for families with children. There should be a variety of preschools, primary schools, and high schools to choose from. Also, if there is a college nearby, you will have no troubles renting your property for a good price. Bear in mind that these kinds of properties will be rented by families, so besides being close to schools, these properties should be close to parks and supermarkets as well.
5. Presence of Amenities
A profitable rental property is not only a good house or an apartment. There is soo much more than that. Nobody wants to live in a place hidden and far away from everything. So, always look for a location filled with physical and social amenities. Tenants want to live in a place where they can easily pay their bills, where a supermarket is nearby, and where meeting their friends for a cup of coffee does not require a one hour drive. Thus, your rental property must be close to supermarkets, shopping malls, restaurant, and basically everything needed for a comfortable daily life.
Tenants will easily occupy your rental property if all the amenities they need are nearby. Alt.tag: Two friends talking and drinking coffee.
6. Being Close to Transportation Facilities
Having adequate transport facilities nearby also plays an important part in rental property investment. This is especially important if your goal is to rent your property to families or businessmen. Working people must commute all the time, so buses, trains or subways must be close. Also, the roads must be in good conditions, and cannot be easily flooded when there is rain.
7. Acceptable Sanitation
Even if you have all of the above in your rental property, it will not be sufficient without proper sanitation. The place must be clean and well taken care of. Every person will immediately walk away from a property that lacks hygiene and sanitation. So, before you decide to rent your property, check things like waste disposal, toilets, and sanitary facilities, septic tanks, water and sewerage, and stormwater drainage, etc. If things seem off, hire a repairman instantly. Also, it is a good idea to thoroughly clean the property you intend on renting, you can do this by yourself or hire some professional cleaning service. Moreover, you should check kitchens and bathrooms, if they seem outdated and rusty, consider renovating them. Even by changing tiles, you can increase the price of a property.
8. Favorable Climate
Well, pretty much nobody wants to live in a place that has rain or snow all the time. Also, probably nobody wants to live in a place where it is always scorching hot. You should do your best to find a place that has a favorable climate. Avoid cities that have harsh climates. Nobody would like to move there. However, if your property is located in a place with a mild climate, it will attract tenants in no time.
Warm and sunny weather makes everything look better. Alt.tag: Mother and daughter walking on the beach.
9. Far Away From Natural Disasters
There are places that are prone to natural disasters, so it is advised to stay away from those. People are simply afraid of living there. And it is going to be really hard for you to rent your property in such areas. So, as previously mentioned, investigate the location. See if that place is susceptible to tornadoes, hurricanes, windstorms, wildfires, storms, and even earthquakes. If it is, consider investing in some other property.
10. Is it Rent-Ready?
If your rental property checks all the things mentioned above, you only have a few more things to check. Look into every corner of your rental house or apartment. Everything must be clean, and of course, working. Check the kitchens and bathrooms, since they are the biggest determiners of whether somebody will rent or not. Also, try to equip the place with some basic furniture. Boca Raton based moving companies at your service and can help move some big pieces of furniture like sofas, tables or beds.