Successfully investing in rental properties requires a careful assessment process. While rental rates are a significant piece of analyzing any property’s potential, there are numerous things beyond rental rates that ought to be considered too. 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 remembering these five things during your rental property search, you will build your odds of having a successful rental property investment in Oakland.
Appreciation Potential
The current value of any potential investment property is at the highest priority for most investors. But perhaps equally important is a property’s potential to appreciate over the long term. Real estate investment is designed to build wealth over the years, even decades. Because of this, it is important to view 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.
Future Development
Another important aspect to consider when searching for a rental property is the area’s potential for development. An area with a lot of new construction may significantly impact existing property values, either by increasing or decreasing them. When considering a rental property, it is important to amass as much information as you can concerning any plans to develop or renovate homes or other structures in nearby areas.
Property Taxes
Alongside the impact of future development, an area’s current and future property taxes are another significant thing to research. High property taxes are not automatically a reason not to acquire the property, especially if the house is located in a highly desirable 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 that are in the developing regions may encounter 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 area has a high number of rental listings, this could be an indication of a strong seasonal cycle or maybe even proof of a community in decline. Perfect rental property is located in an area with strong demand, which regularly correlates to a generally low number of available listings at any given time. Notwithstanding the number of rental listings, it is critical to find out as much as you can about the area before pursuing an investment property there.
Vacancy Rates
Just as a high number of listings is a reason to investigate further, so are high vacancy rates in the area. The more rentals that are available, especially 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 indication of a saturated market. But, then again, low vacancy rates could correspond to higher rents, enabling you to maintain a profitable investment.
In Conclusion
When seeking investment properties, it’s necessary to take a broad view of each property’s potential. By incorporating these five aspects of your search, you can more easily ascertain whether the rental property you are considering is right for you.
At Real Property Management Masters, we have a dedicated team of Oakland 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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