Prior to investing in residential rental properties, one must consider a number of factors, including its location. As Kanat Sultanbekov mentions, choosing the right location can make a huge difference in the overall success of rental property investment. It might impact the occupancy rate of the property, the rental income one can enjoy, as well as the type of tenants they attract. Hence, investors need to do their research and try their best to select the right location for their rental property.
Kanat Sultanbekov underlines factors to consider when selecting the location of a rental property
People searching for the right rental property to purchase must know that its location is the number one aspect that determines the success and performance of the property as an investment. Investors need to consider the following factors when selecting the location of a rental property to make the right choice:
- Low supply and high demand: Before deciding to buy a residential rental property in an area, one must do their research and determine if there is a good supply of rental property in the neighborhood. One should avoid locations where there are already too many properties available for rent. The best-suited neighborhood would be where people do want to live but vacancies are minimal.
- Amenities: Long-term tenants would prefer to live in an area located near to hospitals, schools, grocery stores, as well as in-city transportation options. On the other hand, month-to-month tenants generally opt for rentals located near restaurants and cafes, with a good access to public transportation.
- Safety and crime: No people, especially families with young kids, would want to live in a high-crime area. Hence, it is imperative to check the crime rates of an area before thinking about buying a rental property there.
- Job market and development: Localities experiencing increasing job opportunities typically magnetize more tenants. One can verify the unemployment rate in a specific region through sources like the U.S. Bureau of Labor Statistics (BLS) or by visiting local libraries. It would be a good idea to keep an eye on the news about major employers relocating to a place and requiring workforce or upcoming development projects. Many prospective employees, especially the ones migrating from other cities, often seek housing in areas with promising job prospects.
- Neighborhood: The type of neighborhood one selects for their property investment would influence the type of tenants getting attracted to the property. For instance, if a property is located in a residential area with interstate access and a good transport network, one may attract business people who commute regularly. On the other hand, if a rental is located close to parks and schools, one may attract families with kids. Conversely, properties near a college are likely to attract students who rent only during the school year.
Kanat Sultanbekov points out that cash flow is the lifeblood of any rental property. If the average rent of a property does not cover all of the operating costs and debt payments of the investor, it wouldn’t be worth owning. One should try to buy a property in an area whose average rents cover all costs and leave the investor with a cushion of net income.
