Purchasing an investment property and acting as a landlord can be a good way to enjoy a bit of extra income. However, doing so does require a good amount of commitment in terms of money and time. As Kanat Sultanbekov says, one especially has to put emphasis on finding a property in the right location. The location of the property has a major impact on whether the investment is successful or not, as it impacts many other factors like affordability, availability and demand for rental properties.
Kanat Sultanbekov marks a few pointers that can help select the right location for rental properties
Simply because a specific property is expensive, it does not mean that it is a good investment location. In a similar manner, just because properties in an area are inexpensive, it does not mean that one can enjoy handsome profits by investing in a rental property there. Real estate investments are highly location specific. In fact, varied neighbourhood within the same city may offer different returns on investment. Here are a few pointers one can follow to choose the right location for rental properties:
- Analyze the local market: Prior to investing in a rental property, it is vital to orderly research of the local market. It would provide investors with a good understanding of the supply and demand dynamics in the locality. They should especially keep an eye out for rental prices, vacancy rates, as well as trends in population growth. For example, in case the rental prices in an area are stagnant, but it vacancy rates are high, then it might be an indication that the local market is over-saturated and it is not a good idea to invest in a property there. However, if the vacancy rates stay low even when rental prices are going up, then it might be a sign of a strong rental market.
- Check crime rates: Safety would be a top priority for any renter. Hence, it is vital to take the crime rates of an area into account when searching for the location for a rental property. High crime rates may deter potential renters, and can make it pretty difficult to attract quality tenants.
- Consider school districts: For families that have kids, school districts are likely to be a major consideration when choosing a rental property. Properties that are located in high-performing school districts are commonly in high demand, and hence to command greater rental rates. One must research the quality of schools in an area to identify which districts are most desirable to families.
- Proximity to transportation and amenities: A renter would want to enjoy a convenient lifestyle. Hence, it is vital to consider the proximity of the rental property to important amenities and public transport. Properties that are located near to the major highways, public transportation, as well as prominent shopping and entertainment destinations are usually quite attractive to renters.
As Kanat Sultanbekov says, in addition to the pointers discussed above, one must also consider the future development plans in the locality when trying to find the perfect location for a rental property. Plans for new public amenities or commercial development usually have a significant impact on property values and rental demand.
