When you make an investment in rental property, you are not only picking a place that you want your future tenants to enjoy. You are also choosing a piece of property that will appreciate in value over time.
Thus, it is important to understand what qualities to look for when shopping for rental properties. This helps you get the highest amount of value and potential future value for your purchase.
Meeting your tenant’s needs
The Joint Center for Housing Studies of Harvard University looks into the high rate of people renting their homes. 43 million people rented their homes in 2017 alone, with the number increasing in the following years. This means you will likely have a fair base of potential residents who will end up applying to rent your units. But you will still need to do your part to stand out above the rest.
First, make sure your property can meet the needs of your tenants. Invest in established neighborhoods with larger homes if you want to rent to families. If you wish to aim for a younger demographic instead, consider purchasing investment properties close to college campuses.
Know the growth potential and seasonality
Next, know the property’s appreciation potential. Growth indicators will usually signal how an area may develop over the next years or even decades. Such signs can include planned development projects, high rates of employment, the development of new public transportation systems, and a high household income average.
Finally, know the location’s seasonality. Some properties do better depending on the season. For example, if you buy a summer rental property, you will likely see a slow-down in winter months and may need to adjust your rental rates accordingly. If you keep this in mind, you can select a great rental property.