Rental property is always a nice addition to a real estate investor’s portfolio. However, picking a good one can be tricky, especially when there are so many houses on the market. How can you choose the right one?
Are you looking to find a good rental property in Milwaukee? Rental properties can be a really nice portfolio addition, while also bringing you a lot of profit. However, if you choose the wrong one, you may have a hard time picking the right tenants. This may even result in financial loss.
Luckily for you, there are some features that will make a good rental property stand out from the rest. Here are some things you should look for when picking your next investment.
Location is one of the most important features that determine the attractiveness of your property. It can also be a deciding factor in the type of tenants your property will attract. For example, if your rental property is near school, you will attract families with little kids. If it is near university, you’ll probably have a lot of students interested in renting. All of these are important to consider before making a purchase.
Property taxes vary from area to area. You should always consider them, not just when considering buying the property, but also while deciding on the rent amount. Keep in mind that high taxes aren’t necessarily a bad thing. If you’ve found a property at a great location, you’re likely to find high-quality tenants that will be able to cover these costs. However, if the location isn’t as great, but the taxes are high, you should look away. Also, try to talk with experts who can predict whether the taxes are likely to increase in recent time. For example, if the city is experiencing financial struggles, it is likely to raise taxes.
3. Job Market
If property’s location has growing employment opportunities, it is likely to attract more tenants. You can check Job availability in a local library, or with the US Bureau of Labor Statistics. How can you predict the employment rate? If you see a large company moving to the neighborhood, or an announcement about new working positions, you can be certain that the area will experience a growing number of workers. Keep in mind that this may also cause changes in the local housing and rental market, depending on the occasion and the work in question. Be smart and think ahead.
4. Future Development
Check with the municipal planning department to see if there are any plans for future development of the neighborhood. Some development can be predicted without contacting the government, as well. For example, if you see a lot of construction in the area, you can count that the neighborhood will grow. This will also mean more potential tenants.
5. Crime Rate
Would you want to live in a dangerous neighborhood? Neither would your tenants. If the crime rate is high, the desirability of the neighborhood goes down. Once again, check with your local library to ensure whether or not the location of the rental property is in the safe area, just look at the current statistics, but also take notice if the rate is growing or declining. You must always plan ahead.
6. Neighborhood Perks
The more perks and amenities a neighborhood has, the more attractive it is to the tenants. Are there parks nearby, or expensive restaurants? Maybe the rental property is near a local library or a theater. Malls and shopping districts are also an attractive addition to the neighborhood.
7. Number of Vacancies
Research a bit with your fellow investors and landlords. If you notice that the vacancy number is unusually high, there is likely something wrong with the neighborhood that you’ve missed. Also, if there is a big number of vacant properties, the population is probably declining. Both of these mean less chances of finding the high-quality tenants that will stay with you for a long time.
8. Average Rent Price
The more you earn on the rent, the more you’ll profit. The calculation is simple. If you can’t make your rent high enough to cover all the expenses, including mortgage, taxes, and possible maintenance and repair costs, the property is not worth the money. Make sure you’ve researched rent prices of the neighborhood before you decide to spend the money on the property. If the calculation isn’t good enough, you’re risking losing money, or even bankruptcy.
Should You Choose a Multi-Family or a Single-Family Property?
Multi-family properties are generally a way to get more rental properties at much lower price. However, recent market studies have shown that the COVID-19 pandemic has caused a raise in demand for single-family properties in rural areas. People want to get away from the crowd and to have more privacy. This makes single-family home a better choice.
Of course, this doesn’t mean that you’ll make a mistake investing in a multi-family property. Do your research well and try to put yourself in the tenant’s shoes. This is the best way to predict whether or not you’re looking at a great rental property.