Are Rental Properties A Good Investment

Rental properties are a good investment if you can manage that property well. The key to making rental properties a good investment is to thoroughly vet your prospective tenants before approving them with a lease. Set clear standards that are based on local laws, stick to them, and then always follow-up with your tenants at least twice per year to inspect the property and make sure everything is being taken care of properly.

To make sure you're getting the most out of your investment, consider these specific components of the rental property you wish to invest into before making that investment.

1. Property Taxes

Property taxes are inconsistent across the country because of different levies. As part of your investment planning, you will want to know how much you'll be paying in taxes. Just because property taxes are high doesn't mean you shouldn't invest. It just means you'll need to factor in how much extra rent you'd need to charge. If that monthly rent gets too high, then tenants aren't going to want to rent.

2. The Neighborhood

How good a neighborhood happens to be will influence what kind of prospective tenants will ask about the property. Students rent homes near a school. Families tend to rent homes near a school. Think about the population demographic you want in your home and then invest in properties in the appropriate location.

3. Is There Criminal Activity?

Crime will always drive good tenants away. Before investing, pull the local crime stats for the neighborhood to see if there are serious crimes or high rates of vandalism. If the data shows a rising trend, then that's a neighborhood you're going to want to stay out of for a while.

4. How Is the Employment?

You can only get tenants when there are jobs for the tenants to have. Any community offers the chance to rent, but there are only a select few that have rising employment rates on a consistent basis and high demand. You'll want to seek out the best places to live in order to invest your money because if you'd want to live there, your tenants will too.

5. Parks, Playgrounds, and Amenities

People need things around their home to make it a wonderful experience. Look for parks that are close, hiking trails, bus stops, and other amenities, like a cinema or a shopping mall, to enhance the renting experience.

6. What is the Occupancy Rate?

Maybe that rental property is being sold because they can't find any tenants to occupy it. If the neighborhood has a high vacancy rate, then you're probably not going to have a good renting experience with that investment. Some high vacancy rates are because of seasonal movement, but sometimes a neighborhood just becomes unattractive and people leave.

7. Do You Have a Mortgage?

If you're going to have a mortgage, then you need to know what the average rent is in your area. If the monthly mortgage payment you'd be making is higher than the average rent for your area, then you've got to find a different property.
Posted on Oct 15, 2014


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