With the rental market growing in value, investors are increasingly looking at putting money toward rental properties. Whether considering investing in single-family, multifamily or even commercial properties, investors need to think about the hard questions that come with any serious investment. One of the key issues real estate investors must account for is location. Not only can location determine the cash flow of a property, but it can also affect how these rentals attract tenants.
Before investing in the rental market, here are four factors related to location to think about:
Stabile or improving property values and rental rates
As you consider what makes a good rental property investment, look at the property values and rental rates of properties surrounding the home or building you want to invest in, according to Motley Fool. Real estate agents do the same thing and view comparable properties to see whether home values are stable or rising. Investors may want to calculate the future value of properties that are in the running by looking at the past history of property values.
Properties in and outside of your state
Before becoming an investor, you should determine whether you should invest in properties in or outside your state. There are several advantages to having a rental property in your primary state of residence, according to Philly.com, including being able to manage properties directly and be onsite if there are any issues with tenants. While there are often more costs associated with owning real estate in another state, such as paying property managers, as an investor, you should consider whether you could actually make more money in another state as property prices might be lower than in their home state, yet rents are proportionately the same. This could offset the costs of being in a state different from their main residence. You should also consider if you want to actually manage the properties yourself. If you don’t like the idea of dealing with finding tenants, the late night maintenance calls, or day-to-day upkeep; remote investing and hiring a property management company might make sense for you.
Areas with low crime rate
Another major factor that could determine the appeal of a rental property is the crime rate of an area. With the click of a button, future tenants can research the crime frequency around the property they plan on renting. As a real estate investor, you should do the same research and make sure you choose a property that is in a neighborhood or region with a low crime rate.
Proximity to local amenities
Investors that put themselves in the shoes of tenants should consider whether their chosen location is close to amenities like shops and parks. Properties that are also near public transportation will also be in high demand as tenants want to shorten their commute times.
With these factors in mind, it’ll be easier to invest in a top-quality rental property that is a hit with tenants and generate more income in the long run.