Revenue from rental properties is one of the most popular sources of long-standing income and the success/failure of this investment depends on several crucial factors. Regardless of your investment experience in the real estate field, your long-term objective should be to continue to hold occupancy and sustain a steady source of income.
Identifying a profitable rental property can seem tricky, especially when you are bombarded with multiple real estate hoardings and realtors. While most of the property claims look promising, an investment should only be made when you are 100% sure of its profitability. Thus, it is important to recognize a potentially profitable rental property before you make a decision.
Here are eight characteristics of profitable rental properties that will help you gain a steady monthly income. You can consider them at the time of investing your hard-earned money in a rental property.
1. They Attract Quality Tenants
A profitable property is located in a fine neighborhood and hence, proves to be attractive to real estate buyers and renters. The quality of the neighborhood will also influence the type of tenants you will draw towards your property. For instance, if you own a house for rent in Denver and it is close to the University, chances are that you will attract more students or parents with teenagers as tenants. Also, the culture of the neighborhood plays a huge role in determining the profitability of your property. Hence, choose wisely.
2. They Have Flourishing Job Opportunities in the Vicinity
Ideally, everyone wants to stay close to their workplace. Properties in neighborhoods that have ample employment opportunities in and around them tend to be profitable. Such properties attract more working professionals and hence, more tenants.
When a company starts its operations in a locality, its employees will want to stay close to the vicinity to cut the commuting time. More companies within twenty kilometers of the property area will mean more workers will throng the place and hence, there will be more tenants looking for rental homes.
3. Their Vicinity Has Development Plans in the Pipeline
A profitable property typically stands in an area that is strategically located. This is because everyone from the municipal planning office to construction firms will have future development plans for such localities. New schools, universities, business parks, and complexes will be planned at such locations to encourage more people to invest here. When the neighborhood progresses, rental properties built there grow in value too.
4. They Have Low Crime Rates
Beneficial rental properties are typically safe, adequately protected, and boast of low crime rates. Vandalism and other types of felony are kept under check too. Thus, such properties are more sought after by prospective tenants.
5. The Property Tax is Reasonable
Property taxes are predictable expenses, but they vary according to the location. The property tax for a particular zone can be evaluated by visiting the local assessment office, where you can avail accurate information regarding this. Profitable rental properties attract reasonable property taxes that will not eat into your profit margin.
The goal of your rental property investment is to make profits; hence, you should be aware of the property taxes prevailing in the neighborhood of your interest.
6. They Are Situated Closer to Local Amenities
Amenities offer convenience and this is precisely what your prospective tenants are looking for. One of the characteristics of a lucrative rental property is that accessing standard facilities like grocery stores, malls, movie theaters, parks, swimming pools, public transportation, and schools is easy. No one wants to live in a neighborhood that is an hour’s drive away from places that offer basic necessities and scope for recreation.
7. They Have Fewer Listings and Low Vacancy Activity
Localities that house profitable rental properties will typically have fewer listings and low vacancy rates. This means that such locations are lucrative and have a promising future for a rental business.
If the location has numerous other property listings, it becomes difficult for a new property to attract tenants due to intense competition. Moreover, if the rental vacancy rate of the location is high, you will be forced to lower your rent to attract tenants to your property. An advantageous property always attracts a steady inflow of prospective tenants and always has less number of listings.
8. They Have Ample Parking Space
Ample parking space is a huge concern in most U.S. cities today, especially because it is restricted on most streets. It is hard to find a secure parking place from where cars will not be stolen. A lucrative property, however, is equipped with the provision for residents to park their vehicles in a safe place. Parking is one of the most important concerns and your prospective tenants will definitely take this crucial factor into consideration when making a decision.
When you make an investment, you desire to gain sustainable profits from it. Buying a profitable rental property can be a daunting task. However, with the above-mentioned characteristics, you will be able to short-list your dream possession, which will reap rewards for you in the future.