Successfully investing in rental properties requires a careful assessment process. While rental rates are an indispensable component of analyzing any property’s potential, there are multiple elements beyond rental rates that should be recognized as well. Profitable rental properties manage to share a number of common features, aspects that help maximize their value and earning potential. Beyond rental rates, the five most important things to look for in a rental property are appreciation potential, future development, property taxes, the number of rental listings in the area, and the local vacancy rate. By including these five things in your rental property search, you will double your likelihood of having a successful rental property investment in Reno.
Appreciation Potential
The current value of any potential investment property is at the top of the agenda for most investors. Still, perhaps both important is a property’s potential to appreciate over the long term. Real estate investment is designed to build wealth over the years, even decades. For this reason, it is necessary to view potential investment properties through that lens. Properties in areas that are growing or undergoing revitalization may be good candidates for strong appreciation in value, as are properties in areas that consistently offer good employment and other opportunities.
Future Development
A second important aspect to contemplate when searching for a rental property is the area’s potential for development. An area with a lot of new construction may significantly impact existing property values, either by increasing or decreasing them. When analyzing a rental property, it is vital to accumulate information about any projects to develop or renovate homes or other structures in nearby areas.
Property Taxes
Along with the impact of future development, an area’s current and future property taxes are another essential point to research. High property taxes are not immediately a reason not to buy the property, primarily if the house is located in a highly desirable area. In the same way, low property taxes may be a sign of declining property values or even a temporary feature, if the property is located in a developing area. In particular, homes located in developing areas may experience sharp increases in property taxes as the city or region demands more services to meet the needs of a growing population.
Area Rental Listings
The number of rental listings in any particular area is an important perspective when assessing an investment property’s potential. If the neighboring district has a high number of rental listings, this could be a manifestation of a strong seasonal cycle or perhaps even evidence of a community in decline. An excellent rental property is settled in an area with strong demand, which often correlates to a relatively low number of available listings at any given time. Regardless of the number of rental listings, it is vital to find out as much as you can about the area before pursuing an investment property there.
Vacancy Rates
Just as a high number of listings is a basis to investigate more, so are high vacancy rates in the area. The more rentals that are available, especially if the number of rentals has exceeded demand, the lower rents must be to attract quality tenants. If rental homes are standing empty for weeks or even months, that is a potential sign of a saturated market. On the other hand, low vacancy rates could correspond to higher rents, allowing you to maintain a profitable investment.
In Conclusion
When exploring investment properties, it’s essential to take a complete view of each property’s potential. By incorporating these five aspects in your search, you can more easily determine whether the rental property you are considering is right for you.
At Real Property Management Corazon, we have a dedicated organization of Reno property managers who will help you with this determination process and make your search more efficient. Our professionals are available to assist real estate investors through an array of quality services, offering our market expertise and data to ensure that your next rental property will help you come one step closer to your long-term investing goals. For more information, contact us today!
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