If you’ve recently started your search as an investor looking for a profitable rental property, you might have started to wonder: without having the ability to rely on historical and proven information about the worthiness of a home as a rental income property, how might one decide on where to place their investment? If a home has never been rented out before, how can I know whether it will make for a good rental income property?
Well, luckily there is additional research you can put into action – when doing so, consider these universal features of a profitable rental property.
An ‘Up and Coming’ Neighbourhood
Purchasing in the right neighbourhood at the right time can be one of the best scenarios when it comes to making an investment in real estate, and is surely every investor’s dream.
Accomplishing this is all about conducting your research and being able to spot trends in the market before they become overly obvious to the general public. Which areas are changing? Which neighbourhoods seem to be becoming more popular and intriguing to the public? Have your realtor provide you with the details, and then take it upon yourself to explore the neighbourhoods that are on your radar.
Zoning and Future Developments
Often pinpointing an ‘up and coming’ neighbourhood is accomplished by considering the zoning of the area as well as any changes to such that might be taking place. If zoning changes have been proposed by developers, and are either approved or pending, this can be a major hint towards future development and overall change in the area.
This is often a key piece of the puzzle when trying to envision the neighbourhood in its short-term and long-term future. Ensure to utilize your foresight and have conversations with your realtor about how the future developments can positively affect the neighbourhood or negatively affect the particular property.
Property Taxes and Rental Income
Finally, make sure you don’t leave out factors like property taxes when trying to ascertain which areas make for the most lucrative rental incomes. Check out the property taxes and deduct them from the average annual rental incomes for similar homes. How beneficial is one area over the next when looking at the cold, hard bottom-line figures?
Looking at a home that has a history as a rental income property? Here’s what you need to avoid getting burned.