Like many business opportunities, buying and maintaining rental properties can be quite risky. However, rental properties can yield great returns and remain an excellent way to diversify an investment portfolio. The difference between successful and unsuccessful rental property investors is often their property choice. As a piece of real estate costs a good deal, the wrong choice could have disastrous financial implications. Here are factors to consider when determining if a potential rental property in Atlanta will yield a profit:
Average rental income
A quick online search will reveal the average rental charged on homes in a particular area. Buyers should weigh this against the property’s cost and whether this proposed income would pay the mortgage, property taxes, and other expenses. These expenditures could include the fee for well-qualified property managers in Atlanta.
A study of these rental incomes and where they are projected to go should not be limited to the short-term. Long-term figures are equally important. If property taxes in an area were to skyrocket, but average rental income does not display a commensurate increase, could you still afford it? If you push your rent up by too much to cover such expenses, it may price outside the market, giving tenants less expensive rental options to explore.
While predicting where the property market will be in five years is not an exact science, research and reasoned decision-making could prevent a disastrous investment. Get advice from professionals if you are new to the rental property game to avoid potential bankruptcy.
Development in an area where you are considering buying a rental home is usually a good sign. It means that the neighborhood is in a growth trajectory, as opposed to suburbs slipping into a state of decline and decay. Do not rely on unsubstantiated reporting about development, such as gossip from residents or real estate agents.
If you want to get a clear picture of what developments are scheduled for a neighborhood, a trip to City Hall should provide it. Development plans are a matter of public record and should be on file. This would include zoning in the area.
Some development projects might not be advantageous to a neighborhood. For example, an industrial area springing up next to a residential suburb might drive people away due to noise and pollution. New housing developments could drive older homes’ prices down and make them less desirable rental properties for potential tenants.
Schools and amenities
When evaluating a neighborhood as a rental property investment, a close examination of access to services is vital. Companies like Avison Young include such factors in determining market-related rent figures and the potential longevity of rental relationships.
When viewing family-sized homes, schools are important. Parents want their children to grow up in a stable home in a safe neighborhood and attend a great school. Therefore, they are likely to enter long-term rental agreements if the house is close to good schools. Request information about school zoning to see which schools potential tenants’ children would be expected to attend.
Look for a blend of parks, restaurants, shopping centers, and entertainment facilities like movie theaters in the area and how accessible they are. Neighborhoods that offer access to several amenities, including public transportation, will be popular among buyers and renters. Areas that are isolated from schools and amenities might attract fewer renters, especially those with children.
Since tenants need to pay their rent, they will want access to employment. Therefore, employment opportunities in an area should be an essential consideration when purchasing a rental property. Look for information about businesses operating or opening in the area to gauge whether there are sufficient employment opportunities in an area to justify a property investment.
If an area is in rapid decline because factories and companies are closing their doors, a property owner will struggle to find potential renters. Indeed, they might wind up lowering their rent amount to attract tenants. As mentioned before, this puts the property owner at risk of not managing mortgage payments and other expenses.
Specialized Property Management Atlanta is a local company that offers clients professional services at reasonable rates. Insight and advice from local property management companies can help investors decide if they should purchase a property or not.
As a rental property owner, you will be hard-pressed to find tenants wishing to live in a crime-ridden neighborhood. Therefore, crime rates are a critical consideration when buying a rental property. Law enforcement publishes crime statistics, and they should be easily accessible.
When examining crime figures, distinguish between petty crimes, such as vandalism, and serious crimes like assault and murder. You should also inquire from local police what type of presence they maintain in the area and if there is a local neighborhood watch you can engage with to discuss local crime occurrences.