There’s no point investing in rental property if you don’t bring in a lucrative return. But, for first time investors, finding lucrative investment property is not always as easy as it sounds. Knowing what to look for will ensure that your ROI is worth your time, effort and money.
9 Tips to Find Lucrative Investment Property
1. Job Opportunities
Areas with growing job markets and employment opportunities are great for attracting tenants. The U.S. Bureau of Labor Statistics can help you determine which areas meet this criteria with rates and stats.
If a specific area has a new major company opening up locally, trust and believe that workers will come to the area in droves. Many of those relocating there will be looking for homes to rent.
2. Local Schools
If you’re planning to invest in 1-bedroom condos, this may not be a concern for your tenants. But, if your plan is to buy larger homes, such as those in the Park City, Utah area, your tenants will probably have children. And, if they don’t, children are surely in their future plans.
So, make sure your investment property is located near quality schools. If not, this may affect the rental value of your real estate. Plus, schools with poor reputations bring down the overall value of your property. This could be a major property if and when you decide to sell the property.
3. Neighborhood Location
Want high quality tenants renting your property? Then, you need to buy real estate in a high quality neighborhood. The community’s quality directly affects the tenants your property attracts. This also influences how often your property has available vacancies.
So, let’s say you buy near a college. More than likely, your tenants will mainly consist of local college students or possibly faculty. And, you’ll probably experience your highest vacancy rates during summer months when most students go home for the season.
4. Local Crime Stats
The amount of crime reported in the area also affects property values and the types of tenants you attract. If the area is known for high amounts of criminal activity, your chances are high that you’ll end up renting to someone who actually participates in it.
For hints that crime rates may be high, look for vandalism, graffiti, signs of gang activity and homelessness. You can also get crime stats from the local police department.
5. Community Amenities
Everyone wants amenities they can enjoy in their local community. Some of the amenities your tenants will be hoping to find locally include parks, movie theaters, shopping centers, gyms, malls and public transportation. In other words, look for basically the same amenities you’d want near your home.
6. Property Taxes
Your overall ROI is affected by all expenses related to the real estate. The more costly those expenses, the more they decrease your overall return. So, it’s important to make sure that you’re not losing in the end.
Property taxes, which have no standard rate across the board, decrease your net income. So, make sure you know how much you’ll lose by paying them every year before you invest. The local tax assessment office has this information on file.
Keep in mind, however, that high property taxes doesn’t always equate to a bad investment. If the market rental value is high enough to cover the costs, plus leave a lucrative return, the investment may be worth it.
7. Property Insurance
Insurance for your property is another cost that decreases your overall return. Areas prone to major natural disasters, such as flooding, hurricanes, tornadoes or earthquakes can be costly.
Adding these extras to your policy can eat up your rental income, especially if they’re required. So, find out how much coverage you need and the extras required before investing.
8. Number of Vacancies
High vacancy rates may not mean much during a seasonal cycle. These can be found in college towns, lake home areas, ski resort cities, etc… But, they can also mean the local community is “going down.” Check local crime rates as well comparables to figure out which is the case.
9. Rental Values
Be sure that the rental value of the property is enough to cover your mortgage payment, property insurance, real estate taxes, maintenance costs and other expenses. If not, the investment is simply not worth it.
You also want to ensure that rental values will remain stay or increase over the next five years. Do a little research. If property taxes are due to increase soon, or it will take major improvements to keep the rental value up, your investment will certainly lose money in the end.
Ready to buy a home in a city known for bringing value to the lives of investors. Then, Park City, Utah is the place for you. Jensen and Company will help you find the Utah home of your dreams. Contact Jensen and Company to find out what Park City has in store for you today.