Investing in rental real estate can be a great investment option. Not only can you benefit from long-term real estate appreciation, but you can also generate some cash flow. In order to make the right real estate purchase to suit your needs, you will first need to be able to identify and spot quality potential rental properties. While this can be tricky to do, here are three things you can do to identify a promising future rental property.
The location of a property has always been a driving factor in the long-term success of a real estate property. Because of that, you need to be able to identify a good neighborhood with potential for improvement. According to DataTree, some key factors that will influence the long-term viability of a neighborhood include the local schools’ ratings, access to public transportation and nearby shopping and dining options. Renters tend to flock to neighborhoods that are walkable. You should also consider the future of the neighborhood and whether there is any new development being planned.
When you are shopping for a new rental property, consider the overall eco-friendliness of each asset. Look for properties that have sustainable improvements built in, like solar electricity, energy-efficient appliances or fixtures made from sustainable materials. McWhinney mentions that not only will buying an environmentally-friendly rental property contribute to global conservation efforts, but green properties are considered more desirable by Millennial and Gen Z renters. Members of the Millennial generation say they’re willing to pay more to live in a rental that’s energy-efficient and geared toward sustainability.
Know the Numbers
While you can find a property that is well built and is in a good location, you still need to check the numbers. Property Metrics advises identifying the potential viability of a property by spending some time analyzing the market for potential rental rates, local vacancy trends and other factors that can influence your revenue potential. You then need to carefully analyze your expenses, including repair estimates, property taxes and insurance, association dues and other costs that you will incur along the way.
Ultimately, purchasing a rental property can be a great long-term investment. While it can be a smart decision to buy a rental property, you need to be able to identify quality assets. While this can be tricky and challenging to do, following these three tips will help you to identify a property that would be an excellent rental property target.
If you need help in identifying a rental property or considering rental prices and other data Let Strawberry Property Management help! We are happy to help investors locate and identify good rental properties.