Investing in real estate viable and vibrant long-term wealth-building strategy. For this reason, buying residential rental properties mean thinking long term for your long term investment requires knowing the market and predicting the market for your potential properties. Focusing too much on rental rates can distort a rental property’s long term investment potential and unnecessarily limit your purchase options. It’s important to take a holistic view of each potential rental property within the context of the current (and future) real estate market outside of what is the rental rate you can charge right now.
Choosing a rental property involves making a number of important decisions and weighing all of the critical factors involved. In order to be successful one must look beyond simply comparing your anticipated rental rate to your mortgage payment and thinking more long term about your investment. Industry experts say that there are as many as ten different things to consider when beginning your next property search. For example, the neighborhood in which the property is located, the local job market, the proximity to schools and amenities are all factored into choosing a successful and coveted rental. The location of a property is important because it will determine what type of tenants you will be able to attract to the property and will greatly impact your vacancy rate. The local job market and proximity to amenities will also affect the type of tenants drawn to your rental, for instance a new single family will be wanting something close to school, singles my want to be close to amenities or entertainment. Knowing your rental, market and area ensures you are limiting vacancy and attracting the right renter for your long term investment.
The value of the property, both present and future, can be an invaluable piece of information when choosing a rental to buy. The house’s potential for appreciation is also a factor to consider because even if the property isn’t valued highly at the present, it may be five or ten years down the road given the trajectory of the market and area around your property. Another related consideration is future development in the area. New construction can have a significant impact on property values, so it is important to acquire as much information as you can about local or regional plans to develop or renovate nearby areas and eventually grow your long term investment.
While assessing the market and local conditions are important, investors cannot afford to overlook things such as property taxes, the number of listings and vacancies in the area, and average rents. A detailed market analysis can provide rental property owners with a window into your long term investment and, when combined with the other information gathered, provide a solid base upon which to estimate future performance.
Knowing how much rent you can get right now for a rental property versus the mortgage payment and other costs is an important number to have while making a new investment. But taking a holistic view of each prospective property and evaluating all of the significant factors can help you make wise investments in properties that are likely to grow in value year after year. With Real Property Management, we can help you plan a long investment strategy designed to maximize your returns over the entire span of your property investments. We have decades of market understanding and years experience working in the growing Coeur d’Alene and great North Idaho market. Our professionals assist residential real estate investors through a range of quality services, applying industry best practices to ensure that each property you buy will help you meet your long-term financial goals.
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