If you’re considering becoming a rental home investor, one of the first things you should begin to think about is how you can ensure your collection of rental properties is as profitable as possible. Regardless of whether you’re a seasoned investor who’s been buying and renting properties for years or you’re just starting out, sometimes it can be challenging to know what makes one property more profitable than the next. Cash 4 Kansas Homes has been in the property investment industry for more than 15 years, so we understand what details can make a big difference in the profitability of a rental property. Read on to learn what can be helpful in your investment property searching.
We mention location first because it is probably the biggest determining factor in having a profitable rental property, and one thing is certain: if you can’t get someone to occupy your property, your time as a rental home investor can be cut short quickly. Many potential renters will consider the location of a rental home in their searches, and if your rental property is in a less-than desireable neighborhood, you may find it challenging to keep the property rented. Before you purchase a home for a rental, be sure to consider the neighborhood and its amenities to ensure it will be attractive to possible tenants. Some things to consider are:
- Schools: If your typical tenants are families, having plenty of schooling options nearby is always beneficial.
- Crime Rate: Your tenants will want to feel safe wherever they rent. If your rental property is in an area of town known for crime, it may be challenging to keep it occupied.
- Public Transportation: Especially if you’re in a larger city, choosing a property that is nearby to public transportation, such as bus stops, can make your rental property more attractive.
- Shopping: Many renters will look for homes that are located close to grocery stores, convenience stores, and gas stations.
- Highway Access: If you’re a rental home investor in an area that has a lot of commuters, it may be beneficial to consider how close your property is to local highways and interstates. The closer the home is to the highway or interstate, the more convenient commuters will find it.
If you’re considering purchasing a property within a larger development, such as a town home or a condo, you need to think about the potentially applicable Homeowner’s Association (HOA) fees. If you purchase a property that is subject to HOA fees, this can really impact the bottom line for a rental home investor. To ensure a profitable venture, be sure you know the amount of any potential HOA fees, what is provided in exchange for the fees, and check into the financial stability of the HOA. Buying into a community that’s been operating in the red for any period of time may translate to unfunded reserves for repairs or previous litigation.
Taxes and Insurance
Another key piece of information for a rental home investor to consider is how property expenses like taxes and insurance will impact your operational budget. For information on property taxes, a good place to start is the town’s assessment office. They will have all the prior year’s tax information on file. You can also talk with other property owners in the vicinity to get a feel for the property taxes, or you can sometimes locate specific tax details online if you’re savvy enough. When it comes to insurance, being properly insured is vital. If your rental property is in a location that’s prone to flooding or crime, you may find yourself paying higher insurance rates, which can also eat away at your profit.
Unless you’ve got unlimited funding at your disposal, as a home investor, your livelihood depends on your ability to run a profitable business. While it can be hard to know all the potential merits and pitfalls of a property prior to purchasing it, doing your due diligence and some investigation up front can pay dividends in the end. At Cash 4 Kansas Homes, we’re well-versed in the Kansas City property investment arena, and we know what it takes to run a profitable property investment business. Be sure to check out our other articles, and good luck with your future investments!