Top 5 Things to Consider When Investing in Rental Property

Top 5 Things to Consider When Investing in Rental Property

In recent years, the popularity of investing in rental property has skyrocketed as more people consider ways to diversify their income and assets. While rental property can be a lucrative financial decision, there are a few rental property investment tips to keep in mind along the way. If you’re wondering where to invest in rental property or asking yourself the daunting question, should I be a landlord? Keep reading!

In this article, we will break down the top five things to consider when (and before) investing in rental property.

#1. Choose an Ideal or Up-and-Coming Location For Your Rental

It’s important to be strategic about your location and invest in property with guaranteed demand. For example, locations with copious employment opportunities, near commuter cities, or in booming towns with vibrant cultures are often sought after by prospects. Do some research on certain areas and narrow down a list based on demographic, popularity and location proximity to town centres. This is one of the most essential rental property investment tips to put on your list.

If you’re wondering how to find rental investment properties or where to invest in rental property, the most recommended method is to contact a reliable REALTOR®. They will give you market and location insight you truly can’t find anywhere else. Additional ways to find investment properties are through real estate websites, local wholesalers, a courthouse auction, or by connecting with a seller directly.

#2. Analyze if There Is a Potential Return on Investment

Rental properties can be an advantage financially if you purchase a home with a likelihood of a swift and reliable return on investment. Don’t take on more than you can handle, such as a fixer-upper, if it’s your first rental property. However, a nice apartment or condo in a popular area could bring in potential ROI with minimal maintenance for you as the landlord.

#3. Consider Who Would Likely Live in Your Property’s Area

Get clear on who your ideal tenant would be, whether that’s a family, students, young professionals, or workers. Each tenant will offer a different experience as a landlord and likely different budgets. Choosing an area that’s central for working professionals could guarantee a more stable tenant with a reliable income.

On the other hand, families will probably require a larger amount of space in a suburban area near public schools. College students are always looking for places near campus, but you have to weigh the pros and cons of housing a younger, sometimes rowdier crowd.

#4. Determine If You Want Short-Term or Long-Term Rentals

Once you decide on your target tenant it needs to align with the length of your rental. Long-term rentals guarantee a steady income which makes it easier to budget for repairs or maintenance requests. However, some people might be looking for more affordable options if they are sticking around for a while.

On the other hand, short-term rentals can bring in more profit depending on the area, but you will see changes throughout the year. Usually, short-term rentals allow you to charge up to 3x the market price, however, your property needs to be in a prime location to attract these kinds of renters.

#5. Ask Yourself: Am I Ready To Be a Landlord?

If you are asking yourself, should I be a landlord? The real question is are you ready to be a landlord?  Landlords have a lot of responsibilities and need to be prepared for a variety of worst-case scenarios. It’s important to provide tenants with a safe and habitable living environment and respond to property maintenance in a timely manner. You will need to get clear about your leasing contract, eviction laws, and security deposit returns.

While you could have an amazing tenant that leaves you with minimal tasks, there is always the potential of having a disruptive tenant that causes problems. Landlords need to be prepared for both situations. Make sure you feel confident in your abilities to be a landlord before making the investment.

Investing in a rental opportunity is an exciting time and an amazing opportunity to step into your next business venture. However, make sure to do your research and take proper steps to prepare before taking the first step. In the end, becoming a landlord can be incredibly rewarding once you set yourself up for success.

Are you wondering how to find rental investment properties in a prime location?  Contact us today, your trusted and knowledgeable Verani Realty REALTORS®. Call your local Verani agent or visit verani.com for more information.