What To Look for When Investing in a Rental Property
When it comes to deciding how to expand your existing investment portfolio, it can be impossible to know where to begin. With excellent returns and numerous tax benefits, real estate is one of the fastest-growing and most profitable investment sectors available to investors today. Continue reading to find out what you should be looking for during the search for your first rental property.
Neighbourhood
Regardless of whether you are a tenant or a landlord, location is key during any rental property search. As an investor, it can determine which type of tenants your listing is likely to attract. For example, if you are viewing a rental property located near a local college or university, a large majority of applicants will be students. You may, however, struggle to find occupants during the summer months or semester breaks. A city centre dwelling, on the other hand, will typically interest young professionals and employees on the hunt for a long-term lease. By viewing rental properties in an up-and-coming neighbourhood, such as bidadari, you can attract a wide range of prospective tenants and generate an additional income stream for you and your family.
Local job market
It is no secret that locations with a growing employment sector attract a wider range of prospective tenants. For example, if a major technology firm announces the launch of a brand-new headquarters in a nearby city, consumers in search of employment opportunities are guaranteed to flock there. This can lead to a sudden rise or drop in housing prices depending on the firm involved. This can also have a direct impact on rental costs in the local area. If you receive information about any sudden developments in the local job market, it may benefit you to take a risk and invest in a rental property in that area.
Future developments
As well as researching the local job market, investors must also research any future developments planned for the area. Your local planning department should be able to inform you of any upcoming or future developments currently in the works. While construction may ward off any potential renters, it can also indicate that an area is experiencing rapid growth and may benefit from greater job listings and opportunities. It can, however, also hinder your chances of finding a great rental property with housing developments and high-rise apartment blocks competition for your property.
Average monthly rental costs
Your rental property should pay the bills but offer competitive rental fees at the same time. The best way to determine how much you should charge is to research average monthly rental costs in the area you are looking to buy in. It must cover any monthly outgoings, such as mortgage payments and taxes, and entice prospective tenants. You must also consider how a particular area is expected to fluctuate in the coming years. For example, if the local housing market is experiencing a sudden upturn and taxes are expected to rise, a current bargain could end in disaster down the line. Researching and gauging where a neighbourhood is likely to head in the next couple of years can end up saving you a considerable amount of time and money and even prevent you from being forced to file for bankruptcy.
Local amenities
Before you invest in a rental property, you must assess the availability of local amenities. As a key consideration for a growing number of property seekers, it can have a dramatic impact on your ability to find a suitable tenant. Before you make any final decisions, tour local parks, restaurants, gyms, cinemas, and shopping malls. If the property is within walking distance of a wide range of essential or recreational amenities, tenants are more likely to want to live there. They are also more likely to pay greater monthly rental costs as a result.
Transport links
Transport links are a determining factor for renters looking to relocate. With a growing number of tenants living in high-rise city centre apartments, cars are no longer the necessity they used to be. Most commuters will only consider a rental property if it is within close proximity of transport links. This can include a nearby train or train station, ample bus routes to and from the city’s main business hub, subways, taxis, car hire services, and even airports. This can benefit renters relocating from out of town or employees required to travel for work-based events or meetings on a frequent basis.
If you are on the hunt for your next investment opportunity, real estate can be a great way to expand your existing portfolio. But before you make a final decision, you must consider a number of key factors including neighbourhood, local job market, future developments, average monthly rental costs, local amenities, and transport links.