According to the Rental Protection Agency, there are currently about 111,541,067 renters in the United States. With average rent rates hovering around $959 in 2015, rental property owners therefore have the opportunity to make a great profit off their properties. Prior to buying your first (or even second) rental property, however, it’s important to understand that rental properties drastically differ in value. In other words, a beautiful property in a lovely neighborhood will have a higher rent rate than a small, rundown property near the local prison. Here are the housing features that could make your rental property more profitable.
- Neighborhood of the property: The neighborhood you choose to buy in will not only dictate the type of tenants you deal with, but also how often you have vacancies. If you purchase a rental property near a university, for example, you will likely have vacancies closely following graduation dates. The type of neighborhood in which you buy will also dictate the property’s rent rate.
- Crime rate: If the area in which you are buying has a high crime rate, you could have a difficult time renting out the property for a decent rate. As a result, it’s important to inquire about vandalism rates, petty crime rates, and serious crime rates at the local police station.
- Quality of local schools: Expecting couples looking to rent are likely to favor neighborhoods with good schools. It’s important that you actually research the quality of the school prior to buying because a poor local school will reduce the overall value of the property you are purchasing.
- Growing job market: Cities with growing job markets tend to draw bigger crowds and more potential renters. To find out the growth rate of a city’s job market, check out the U.S. Bureau of Labor Statistics’ website.
- Local amenities: Younger renters typically look for properties near the local gym, mall, public transportation stop, or parks. It’s also important to be aware of any new developments that could degrade the value of the property in the future.
- Rent rates: Once you become a rental property owner, you will have to set your own rent rate. To ensure that your rates are competitive, but still high enough to make a profit, do some research into the average rent rate in the area. In addition to this research, make sure to look into the area’s vacancy rates. It’s important to know if the area will remain popular throughout the upcoming years so a new, potential renter is always interested.
Of course, this is only a brief list of housing features that could make your rental property more valuable. For more information about purchasing a rental property, or to learn more about home financing, contact one of our mortgage specialists today.