Why Rental Rates Aren’t Everything

Why Rental Rates Aren’t Everything
In our last blog, Four Money Making Moves For Investment Property Owners, we touched upon why rental rates aren’t the “end all be all” when it comes to owning a profitable investment property. This time around, we’re going to dive deeper as to why this is.

Successful real estate investment is about creating a long-term wealth development strategy. Focusing too much on rental rates can negatively affect the property’s long-term potential. If you follow these three steps, you will greatly increase the odds of generating a lucrative rental property for the long-haul.

Weigh All Your Options
When selecting an investment property, you’ll have several important decisions to make, and it’s critical to weigh all of your options carefully. If you’re planning on renting out a home for an extended period of time, thinking beyond the comparison of your anticipated rental rate to mortgage payment is a must.

Factors such as:

  • The location of the property
  • The local job market
  • Nearby amenities

Should all be taken into consideration when choosing an investment property. The location, job market and amenities will all determine the number and type of tenants that will be attracted to your rental property. Not considering these things can result in a vacant rental or even allowing tenants that don’t match your qualifications to move-in, just so you have cash flow for the property. This can be problematic and open up a whole new can of worms that could have been avoided, simply by weighing your options.

Present and Future Value
The present and future value of the property is an extremely valuable piece of information. Of course, you want the value of the property to be high initially, but what about 5, 10, 15 or even 20 years down the road? Take a look at real estate and economic trends to stay ahead of the game. Even if the value of the property isn’t high right off the bat, it might change down the road. Another integral piece of information would be to find out if new construction is expected to develop around your area. This could potentially increase the value of your property over time. Gathering local and regional renovation plans for the area could set you up for great long-term success.

Market Analysis
Having an overview of the local market conditions is important, but potential property owners can’t afford to overlook things such as property taxes, number of local vacancies and the average cost of rent. A detailed market analysis can provide investment property owners with a window into the near future. When combined with the other information accumulated, can establish a solid foundation to estimate future performance.

Reed Property Management
Yes, knowing the rental rate versus your mortgage payment is important. But stepping back and taking a look at the big picture can provide you with excellent long-term success in the rental property world. At Reed Property Management, we can help you understand the in’s and out’s of strategic investment property ownership. If you are looking to get the most return possible on your investment property, give us a call! We’d love to help you reach your long-term investment goals.


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