Can You Predict Will Your Property Investment be Profitable
One of the major concerns new investors have is whether or not their investment will turn out profitable. While there is no way to be 100% certain what the outcome of your investment will be, you can still somewhat predict whether a property is going to pay off or not. With that said, here are 10 factors or features to consider before choosing a property to invest into.
#1 The Location
First and foremost, consider what neighborhood your property of choice is located in. Usually, the neighborhood you choose will dictate the type of tenants the property will attract, as well as indicate possible vacancy rates. For example, if you choose a property located near a university, it is likely that your vacancy rates will be very low due to high demand for student accommodation. Similarly, if you choose a lower end neighborhood, you will likely get less reliable tenants that might not always pay rent on time. Hence, it is important to look for the right neighborhood that will ensure the best possible outcome of your investment.
#2 Close Proximity to Schools
While it is not mandatory that you purchase a property near a school, doing so can significantly increase your chances of securing consistent cash flow. Besides, if there are no good schools nearby, the value of your property will be significantly affected. If you’re looking for families to rent out your units, they will most likely seek a location that’s close to a good school or college.
#3 Crime Rates
Crime rates play a significant role when it comes to determining the value of a property. After all, no one wants to live in a location with high crime rates, unless their financial situation forces them to do that. Hence, make sure the crime rates are low in the area you want to invest in. Always do some research before making an offer. That way, you will also eliminate potential issues that come with crime-related concerns.
#4 Look Into the Job Market
One more thing you should consider is the quality of the job market in your chosen area. Keep in mind that growing employment opportunities will attract more tenants. Hence, look for areas with higher job availability. Keep in mind that the situation on the job market may cause housing prices to increase or decrease.
#5 Amenities
Amenities around the property can attract a greater number of tenants and even allow you to charge a bit more on the monthly rent. These amenities include parks, restaurants, gyms, movie theaters, public transportation, and other facilities.
#6 Number of Listings and Vacancies
Keep in mind that if a certain area has a high number of listings and vacancies, it is not necessarily a good thing. This is usually a bad sign since it indicates that the neighborhood is in decline, especially if the listings have been up for a longer period of time. If you find these high vacancy rates, think twice whether the property you’re interested in is worth the time and money.
#7 Look at Average Rent Rates
The best way to determine if a certain property is going to be profitable is to take into consideration the average rent rates in your selected neighborhood. By looking at the comparables, you will know whether the property will bring in enough monthly income to cover your mortgage, taxes, and other expenses. You will also be able to determine the risk related to your investment.
#8 Natural Disasters
Lastly, take into consideration natural disasters, which can significantly affect your return on investment if they should happen. That’s why you’ll pay insurance on the property, which is going to cost you much more if you choose an area prone to earthquakes or flooding. Hence, I suggest choosing an area that’s not often affected by these disasters in order to keep your insurance fees low and make room for more profit.