Every real estate investor looking to buy a property knows that location is one of the most important factors to consider before settling on a deal. However, location is just as important when looking at investing through rental properties. Here are just a few ways in which the right (or wrong) neighborhood can make or break an otherwise fantastic investment opportunity.
You might have gotten lucky and found an incredibly nice house for a reasonable cost, or maybe you've just finished your flip of a property that you managed to get for cheap. However, now you're likely to be faced with a new issue due to your neighborhood. If you've lucked into a gorgeous property in an affordable neighborhood, renters might still look more readily towards affordable properties. After all, about 27% of Americans rented their home in 2016, and rent can be expensive when you've got other household costs to take care of. The right property could end up being a bust if your rent estimate is too far above the average neighborhood rent.
On the other hand, you could try your luck at a more expensive neighborhood for the sake of being able to charge future renters more. Rent statistics for these neighborhoods might indicate you stand to make more money through increased rental payments. However, there's a catch - you'll need to find a way to afford your initial property purchase in a more expensive neighborhood. Because of this more costly investment, you stand to lose more if you fail to rent it out in a reasonable time frame.
In order to avoid both of these issues, try using a neighborhood search tool before you settle on a property to invest in. Neighborhood search tools, when combined with property reports, rent estimators, and more, can help you select a neighborhood that has all the qualities you're looking for in your future investment. As long as you have a general idea of what you're looking for and where, you'll be able to find the right property for you using these resources.
Pricing your rental can be a struggle, especially if you've chosen the wrong neighborhood. Luckily, neighborhood search tools can help you choose well. For more information on location and its impact on rental properties, contact Rentometer today.