When entering the real estate industry, there are a number of things to consider. For one, there are so many sectors of real estate that you first need to choose which area you want to get your start in, and then you have to figure out how you can make money working in that particular area. But the biggest factor is the latter… how can you make money in a particular section of real estate.
A lot of people are often intimidated by the real estate industry simply because they don’t know too much more about it other than being a real estate agent. But little do most people know that you don’t have to be a real estate agent to get in the real estate industry, nor do you need a degree in finance to get started in the industry… In fact, regular, hard-working people are in the real estate business by way of investing.
When talking about investing, we’re not talking about stocks and bonds either… Though there are several different ways to invest in real estate, the more popular, and actually the easiest way to do so is by investing in rental properties.
In theory, to invest in a rental property is a simple process. You set a budget for yourself, find a home within your budget, and secure financing through a direct lending company. This is the process “in theory.” Of course, there’s much more to it than that… But again, the biggest factor to consider in investing in a rental property, once you’ve secured funding and acquired an actual property, is how can you profit from your rental?
Well, you, of course, want to find the right tenant(s) but the true success in having a profitable rental is all in the details of the property itself. When considering investing in a rental property, put a little more focus on the features and characteristics of the property itself. By doing that, you’ll attract the high-caliber prospective tenants you desire to rent to.
Features and Characteristics of a Profitable Rental Property
Whether it’s a family of one or a family of four, square footage is a big deal to renters just as much as it is to home buyers. If you’ve ever rented an apartment before, you know how important square footage is to renters and they will walk away from a property if the unit is too small for the rental asking price.
So in your search for a rental property to invest in, make sure you’re looking at the square footage to find one that will appeal to prospective renters. A property can have nice upgrades, but if those upgrades are packaged in a tiny property, people will look elsewhere.
Safe and Secure Neighborhood
Safety is the number one concern for most people when moving into a new community, neighborhood, or home. As an investor, you should want to purchase a property in a safe neighborhood, but the home you can afford to purchase in a particular neighborhood all depends on how much financing you were approved for.
Of course, homes in the nicer neighborhoods are going to cost more but the return on your investment will be worth it, based on the type of prospective tenants you’ll attract and the lower likelihood of your property being vandalized. According to huduser.gov, residential stability is one of the characteristics associated with lower crime rates.
If prospective tenants visit the property and feel uneasy in any way about the location of the property, they will look elsewhere.
Parking is also a big deal to renters, especially if they’re coming from a rental where they were only allowed two parking spots, which limited their allowance of visitors. When buying a rental, you want to make sure it’s a property with a garage, driveway, or at least decent street parking.
Outdoor Living Space
If you’re looking for a rental property in a sunny location like California or Florida, one of your biggest features will be your outdoor living space. People enjoy being outdoors during the warm summer months. You want prospective tenants to look at the outdoor space and envision themselves entertaining or creating a garden (with your approval, of course).
While you’re house hunting for rentals, look for homes with patios, garden areas, and even pools. This is especially important if you plan to rent to families with children or are purchasing in a warm climate state.
Many renters are on the hunt for rental properties because they’re relocating for their job. To ensure your property is a profitable one, consider looking in areas that are in close proximity to businesses or areas that are experiencing a lot of development because that is a signal that something is happening in that city’s job market, which is going to bring growth to that area.