Successfully investing in rental properties requires a careful assessment process. While rental rates are an essential component of analyzing any property’s potential, there are many elements beyond rental rates that should be recognized as well. Profitable rental properties tend to share a number of common features, aspects that help maximize their value and earning potential. Beyond rental rates, the five most important things to look for in a rental property are appreciation potential, future development, property taxes, the number of rental listings in the area, and the local vacancy rate. By including these five things in your rental property search, you will boost your odds of having a successful rental property investment in Williamsburg.
The current value of any potential investment property is at the top of the list for most investors. But fairly significant is a property’s potential to appreciate over the long term. Real estate investment is designed to build wealth over the years, even decades. For this purpose, it is important to look at potential investment properties through that lens. Properties in areas that are growing or undergoing revitalization may be good candidates for strong appreciation in value, as are properties in areas that consistently offer good employment and other opportunities.
A second crucial aspect to consider when searching for a rental property is the area’s potential for development. A sector with a great deal of new construction may greatly impact existing property values, either by increasing or decreasing them. When examining a rental property, it is important to collect information about any plans to develop or renovate homes or other structures in nearby areas.
Accompanied by the impact of future development, an area’s current and future property taxes are another critical thing to research. High property taxes are not an immediate reason not to buy the property, particularly if the house is in a sought-after area. Likewise, low property taxes may be a sign of declining property values or even a temporary feature, if the property is located in a developing area. In particular, homes located in the developing areas may undergo sharp increases in property taxes as the city or region requires more services to meet the needs of a growing population.
Area Rental Listings
The number of rental listings in any particular area is an important aspect of assessing an investment property’s potential. If the encompassing region has a high number of rental listings, this could mean that there is a strong seasonal cycle or perhaps even an indication of a community in decline. An excellent rental property is located in an area with strong demand, which frequently corresponds to a comparatively low number of available listings at any given time. Regardless of the number of rental listings, it is important to find out as much as you can about the area before pursuing an investment property there.
Just as a high number of listings is a basis for examining more, so are high vacancy rates in the area. The more rentals that are available, particularly if the number of rentals has exceeded demand, the lower rents must be to attract quality tenants. If rental homes are standing empty for weeks or even months, that is a potential sign of a saturated market. On the other hand, low vacancy rates could correspond to higher rents, allowing you to maintain a profitable investment.
When searching for investment properties, it’s essential to take a general sense of each property’s potential. By introducing these five aspects of your search, you can more easily determine whether the rental property you are considering is right for you.
At Real Property Management VA Peninsula, we have a dedicated team of Williamsburg property managers who will help you with this determination process and make your search more efficient. Our professionals are available to assist real estate investors through an array of quality services, offering our market expertise and data to ensure that your next rental property will help you come one step closer to your long-term investing goals. For more information, contact us today!
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