Do you plan to buy a residential rental property to boost your investment portfolio? Honestly, Investment properties can be very rewarding if you make an informed decision or the right choice. Asides the high profits, a first time investor can find real estate to be a daunting venture.
Real estate is definitely a tough venture, hence, it is of great importance that you carry out detailed research before you dive into it.
Before you invest in a residential rental property, here are top features you should look out for.
Top 7 Features of a Profitable Residential Rental Property
Importantly, the neighborhood you choose will determine the class of tenants you will attract, as well as your vacancy rate. You can’t charge the same rent fee for both Ikorodu and Ikoyi. The difference is clear.
Make your research to ascertain if the area is free from criminal activities such as armed robbery, kidnapping, serial raping, assasination and many others. You don’t want to own a residential rental property in such an area because it will affect the rate at which you will get tenants.
Property taxes vary widely across different areas. You need to be aware of how much you will be losing in the name of taxes. Property taxes are not always a bad thing especially in a great neighborhood that attracts long-term tenants.
Are there social amenities in the neighborhood? Make out time to tour the neighborhood and check out the parks, restaurants, gyms, movie theaters, public transportation links, and all the other fascinating spots that will attract tenants.
Average Rent in Location
In addition, you need to find out what the average rent is in that area. You should also research the area very well in order to gauge where it might be headed in the next four to six years. As a matter of fact, if you can afford the area now but taxes have the tendency to increase in coming years, an affordable residential rental property today could mean bankruptcy later.
Areas with increasing employment opportunities attract more tenants. If you see an announcement about a major company moving to the area, you can be sure that workers in search of a place to live will flock there. This may cause housing prices to go up or down, depending on the type of business involved. You can assume that if you would like that company in your backyard, your renters will as well.
Future Development of the area
The municipal planning ministry will no doubt have necessary information on developments or plans that have already been zoned into your neighborhood. If there is a lot of construction going on, it is probably a good growth area. In addition, be on the lookout for new developments that could possibly hurt the price of properties. Additional new housing properties or estates could also compete with your property.
Fact is, Real estate has produced several wealthy people in the world. Hence, it can be considered as a highly profitable investment. However, experts noted that it is worthwhile to research well before you dive into it. These points will guide you to choose the most appropriate residential rental property to your advantage.