Did you know that the average rental price for homes increased by more than 7% from 2021 to 2022? That means people who own rental property are making about 7% more this year than they were last year. Real estate is a booming business, but it’s not as easy as buying a house and waiting for the money to roll in.
Finding a great investment property requires a lot of time and energy. You have to research the neighborhood, look at comparable properties, and calculate how much you’ll be able to earn from rental payments.
In the article below, you’ll find some signs to look for when trying to find a good investment for your real estate portfolio. Read on to learn more about investing in real estate.
The Property Has the Potential for Appreciation
There are two different ways to make money on a rental property. You can make money every month from your tenants’ rent payments, and you can make money by selling the property after it appreciates in value.
It can be hard to figure out if a home will appreciate in value, but there are a few things you should look for. You should think about the neighborhood where the property is located.
Is it in an up-and-coming neighborhood that might be more desirable in the future? If so, that’s a good sign. As the neighborhood becomes more desirable, your property should become more valuable along with it.
Be sure to look for up-and-coming neighborhoods when you’re thinking about adding properties to your real estate portfolio.
The Property Is Located in a Good School District
Neighborhoods can become more or less desirable, but school districts are a little more consistent. Families looking for their first home often try to buy homes in good school districts.
Even smaller homes can attract a lot of interest if they’re located in a good school district.
The Investment Property Needs Inexpensive Renovations
It’s generally not a good idea to buy investment properties that can need extensive renovations. A property like this is usually a bad investment because renovation costs can spiral out of control.
That said, you can often find good deals on properties that require small renovations. Some investors don’t want to do simple renovations.
If you’re handy enough to do simple maintenance and renovations yourself, you can turn a nice profit on a rental property.
The Area Has Strong Job Growth
Buying property in a city with strong job growth is a great way to ensure you’ll always be able to find tenants and potential buyers.
Cities with strong job growth attract people who have the ability to pay rent and buy homes. Buying a property in an area with little to no job growth is a dicey proposition.
The city that you’re buying property in may lose residents as people seek jobs elsewhere. If the city loses residents, you’ll have a hard time finding renters or buyers.
How to Find a Great Investment Property
If you’re willing to take the time to do your own research, you may be able to find an investment property that will provide a great return on your investment. Be sure to use the tips in the article above to select the perfect property for your real estate portfolio.
When you’re ready to hire a property management company to take care of your rental, get in touch with the experts at Wolfnest.
