Buying Investment Property How to Spot Profitable Rental Property Investments by Ahmad Shukri October 22, 2018February 19, 2019 by Ahmad Shukri October 22, 2018February 19, 2019 What makes investment properties worth it? As for the case of any of the investment choices available today, there are investments that are worth it and investments that are just not! So, what makes profitable rental property investments and how can beginner real estate investors distinctively differentiate a bad income property from a good one? Go over these points whenever you’re buying rental property investments in order to determine the eligibility of possible real estate properties and their success in generating income: Location When it comes to finding the perfect location for rental property investments, investors must factor in all attributes that make for a successful real estate investment. When selecting a location, here are some factors that should be on the mind of all real estate investors: Neighborhood The neighborhood you choose for rental property investments will affect the type of tenants your rental properties will attract. If you’re looking in a neighborhood near the beach, then you’re going to be looking at properties more suitable for short-term rentals. Additionally, if you’re buying a property in a college town, you are going to get many student tenants. Accordingly, make sure you strategize the neighborhood you choose to buy an investment property in. Schools Many real estate investors start their investing journey with single-family homes. That’s mainly because it’s a familiar type of property and managing it wouldn’t be much different than managing your current household. Meanwhile, if you’re buying single-family homes as rental property investments, you need to accommodate the niche in the market that these types of properties attract: families. Keep in mind that families do extensive research of the school district and quality of education before making a decision on a rental property. Doing your homework when buying such rental property investments requires you to go through the area’s schools and ask yourself whether the educational facilities are good enough for future tenants. To learn more about how we can help you choose the ideal location for a real estate investment, click here. Crime rates Crime rates always deter people from bad neighborhoods. Nowadays, you can easily conduct a crime rate search when you’re buying rental property investments online. Check out Crimereports.com for an accurate crime rate report for the area or neighborhood. If you’re wondering whether you should buy a property in an area with high crime rates, read this blog post: Should I Buy a Rental Property in a Bad Neighborhood If It’s Really Cheap? Employment Employment is going to attract tenants to your rental property investments. Therefore, finding locations with high employment rates and jobs are going to help you in lowering your vacancy rates. You can never go wrong with rental property investments if you hear that a big corporation is opening headquarters in your city. The job market creates a sustainable flow of residents that are likely to rent before committing to buying. Amenities Whether you pay attention to this or not, amenities actually attract people to certain areas. Of course, amenities can be gyms, parks, malls, grocery stores, and public transportation. If you’re evaluating certain locations for rental property investments, make sure you factor amenities in your final decision. Keep in mind that it doesn’t matter if you’re going for short-term rentals or long-term rentals as amenities are needed for any type of rental property to attract tenants. Vacancy rates Vacancy rates are indicators that show how desired the location is. Additionally, vacancy rates help real estate investors find the best rental property investments that will generate the highest amount of rental income. Keep in mind that lower vacancy rates usually indicate a high demand and low supply with rental properties. Meanwhile, high vacancy rates tell real estate investors that the said location is not the desired option for both tenants and homeowners. Taxes The tax benefits of real estate investments are plenty! Any rental property investor must assess the benefits that the area will grant him/her. Keep in mind that property taxes are not uniform across the US real estate market and different locations offer different tax incentives. Just take a look at the tax benefits of Opportunity Zones, for example. In any case, you must carefully consider property taxes as they will affect the return on investment from your rental property investments. Want to know more about the tax benefits of real estate investing? Read this blog post: The Tax Benefits of Real Estate Investments. Analysis Analyzing rental property investments is a precautionary measure that can protect your investments and ensure you’re making the right decision by choosing specific properties that have the ability to yield income. Thanks to the vast usefulness of the internet and computerized data configuration, we’re able to analyze potential investment properties and assess their functionality as income properties. Of course, you can complete a rental property analysis manually, but you’ll need to invest serious time in coming up with reliable results. With Mashvisor’s rental property calculator, you can do three months’ worth of research in only 15 minutes. With such sophisticated information about all aspects of investment properties, real estate investors can use the rental property calculator to find the cap rate, cash on cash return, Airbnb occupancy rates, and even expected rental income. All these factors are comparable to other properties, so you can make a balanced real estate investment decision. In addition to that, you can utilize the heat map analysis to locate the absolute best rental property investments in any city or area. Through the integration of accurate maps and data analysis, you can filter out neighborhoods with properties that don’t fit your investment criteria and only analyze those that could potentially be profitable. The snapshot below is to give you an idea about Mashvisor’s heat map analysis: Read this blog post to learn more about Mashvisor’s heat map analysis: Heatmap Analysis: The Secret to Successful Real Estate Investing. To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here. Financing & Loan Shopping Financing rental property investments is not an easy task, especially for the beginner real estate investor. Many investors go for the wrong type of financing for their investment properties which can turn a potentially positive cash flow income property into a negative one through accumulating an increasing interest rate. In the US housing market, property buyers can enjoy a wide selection of mortgage plans and repayment programs, but keep in mind that not all will be suitable for your real estate investment strategy. Wondering about financing options for rental property investments? Read this blog post: Discover the Most Popular Real Estate Financing Methods. Final Thoughts These points are meant to guide you in the process of finding, selecting, and closing on rental property investments that will make you money. Keep in mind that making the right real estate investment decision is not going to be an easy one when looking for the most profitable rental property investments. The most important thing to keep in mind is to stay up-to-date on changes in your local real estate market. How do you select property investments that you know will make money? Have any extra tips you can share? Start Your Investment Property Search! START FREE TRIAL FinancingInvestment Property AnalysisLocationTax BenefitsVacancies 0 FacebookTwitterGoogle +PinterestLinkedin Ahmad Shukri Ahmad is Content Writer at Mashvisor with a degree in marketing. He enjoys writing about everything related to real estate and especially the top markets for investment properties. 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