Research is a part of any business transaction and researching investment property is no different. The strength of your research can often times predict when you have selected a property that can earn a cash flowing income each month. Since there is more than the way a property looks, it is essential to know how to read into the factors that have a history of helping properties become successful. There are generally 4 tell-tale sings of a prosperous investment property that you should be aware of before you make your final purchase. This information is useful for any property even if you are working individually or with an investment group.
Signs of a Prosperous Investment Property
1. Excellent Community Location
Propertis traditionally do very well in markets with a strong middle-class population. Houses that are available in communities where middle income workers live rarely stay empty. The need for housing is always strong in these areas because many single people that are just starting out move into these areas. A large percentage of mid-career adults move into properties in middle-class communities while building their retirement savings. Homes in these areas are popular with people that like to enjoy the area surroundings and socialize frequently.
2. Less Than 5 Leasees in 3 Years
Rental properties by nature are not constructed to have just one owner for the life of the property. A high turnover rate could be one sign of many issues. Leases that are abruptly cut short can be due to property management, job loss or other financial disruption that causes a tenant to find another property. Performing public research on any property will help you determine the history of the property and how to evaluate its success or failures. The best properties are those that have a strong history of well-mannered tenants that sign long-term lease agreements.
3. Freshly Rennovated and Repaired
Many times looks can be deceiving when it comes to investment properties. You can fall in love with the location, the exterior and the neighbors, but there could be problems with the interior. It is easy to cover up signs of damage with paint or construction materials. Tenants that tour available properties always check the kitchens, bathrooms and bedrooms before any other area of the house. Making sure that these areas are rennovated and all repairs are taken care of before purchase ensures rental success.
4. Stable Monthly Rent Prices
The background information that you obtain for a property before you invest can be eye opening. It is perfectly normal to raise rent as economic activity improves and local markets adjust to the changes. Some landlords prefer to raise rent annually without giving any type of incentive or reason to tenants. This often contributes in high turnover patterns. If a property is on the market for more than 4 months, it is usually a sign that there is a problem with the interior, price or the rent. Properties on the market for less than one month often have a history of doing very well.