Successfully investing in rental properties requires a careful assessment process. Although rental rates are integral to analyzing any property’s potential, there are a number of things beyond rental rates that must be considered as well. 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 effectively incorporating these five things in your rental property search, you will significantly increase your chances of having a successful rental property investment in Ransom Canyon.
Appreciation Potential
The current value of any potential investment property is at the top of the list for most investors. However, what is 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. Because of this fact, it is essential to look at potential investment properties in that regard. Properties 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
A second important aspect to analyze when searching for a rental property is the area’s potential for development. A place with a lot of new construction may dramatically impact existing property values, either by increasing or decreasing them. When taking into consideration a rental property, it is crucial to take in as much 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 another critical thing to research. High property taxes are not automatically a factor not to purchase the property, primarily if the house is situated in a very desirable area. Likewise, low property taxes could be a sign of declining property values or even a temporary feature, if the property is located in a developing area. Specifically, homes that are in developing areas may experience sharp increases in property taxes as the city or region would need more services to meet the needs of a growing population.
Area Rental Listings
The number of rental listings in any particular area is an important aspect of 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 probably even evidence of a community in decline. An ideal rental property is situated in an area with strong demand, which usually relates to a moderately low number of available listings at any given time. Regardless of the number of rental listings, it is important to catch on as much as you can about the area before pursuing an investment property there.
Vacancy Rates
Whilst a high number of listings is a reason to inspect further, 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. Then again, low vacancy rates could correspond to higher rents, allowing you to maintain a profitable investment.
In Conclusion
When searching for investment properties, it’s essential to take a comprehensive view of each property’s potential. By counting these five aspects of your search, you can more effortlessly determine whether the rental property you are considering is right for you.
At Real Property Management Services, we have a dedicated team of Ransom Canyon property managers who will help you with this determination process and make your search more efficient. Our professionals are available 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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