Here’s the thing about rental rates: Not only do they severely limit your buying options, they can distort a property’s true potential.
Taking a holistic view of a potential property is the only way to understand its real value. Here’s why.
Factors of a Profitable Rental
Rates aside, there are some other important factors that need to be considered when choosing the right real estate investment. In fact, some industry experts say that there are as many as ten different things to consider! Among them:
- Location of the property
- Local job market
- Nearby amenities
- Crime rates
- Property taxes
In order for your investment to make you real money, you must look beyond simply comparing the anticipated rental rate to your mortgage payment.
The value of the property, now and in the future, can be an invaluable piece of information when choosing a rental to buy. The house’s potential for appreciation must be one of the long-term factors considered when making your decision, because even if the property isn’t valued highly at the present, it may be five or ten years down the road. Another related consideration is future development in the area. New construction can have a significant impact on property values!
While assessing the market and local conditions are important, investors cannot afford to overlook things such as property taxes, the number of listings and vacancies in the area, and average rents. A detailed market analysis can provide rental property owners with a window into the near future and, when combined with the other information gathered, provide a solid base upon which to estimate future performance.
Want some help with your investment? Harbor Property assists residential real estate investors through a range of quality services, applying industry best practices to ensure that each property you buy will help you meet your long-term financial goals. Give us a call!