Being a landlord can be financially rewarding, provided you invest in the right properties and make wise decisions. One of the main decisions you’ll need to make is where you buy your rental properties. Because location is crucial, you’ll need to spend a considerable amount of time in researching an area before making an investment. Here are some basic considerations involved in finding some of the best places to buy rental properties.
Besides affecting the quality of tenants that will be attracted to your rentals, the type of neighborhood for your rental property can also impact vacancy frequency. Thus, if you don’t want to deal with a lot of vacancies, then perhaps you may not want to buy property close to a college where students will be returning home during summer breaks or leaving permanently once they graduate.
Also, when considering neighborhood quality, look for any amenities it may have to offer. For example, check for public transportation, malls, parks and other attractions that can draw renters.
Find out the crime rate of an area as you’ll want to be sure it’s safe so that prospective tenants won’t be afraid to live in your rentals. Don’t ask homeowners with homes on the market located near the area you’re considering buying about the crime rate. Instead, check with the city library or the police department as these sources can provide you with the latest statistics, regarding crime, as well as the types and frequencies of crimes.
Quality of Nearby Schools
Once you’ve located a property, be sure it’s in an area that has good schools as this can be a huge influence of property value. Consider that schools that are rated low won’t attract tenants with families or those who plan to have kids later. One way to check the quality of schools is by going to schooldigger.com where you can find ratings on schools districts throughout the United States.
Best Areas for Rentals in America
When it comes to investing in property rentals, some areas are better than others.
- The city with the highest yearly gross rental yields for 2015 was Baltimore City, Maryland with 28.5 percent;
- In second place was Clayton County, Georgia with annual gross rental yields of 25.8 percent.
- Following in third place were Bay County, Michigan, Wayne County, Michigan and Macon Georgia.
Counties With Lowest Rental Yields
Counties with the lowest grow rental yields were:
- Arlington County Virginia with 3.3 percent
- California Bay area (3.4 percent)
- Williamson County, Tennessee
- Kings County, New York
- At the bottom of the list was Kings County (Seattle), Washington.
Additional Considerations and Warnings
- Consider the property taxes in an area by visiting the town’s tax assessment department. You could also speak with local homeowners.
- Consider how many listings are in one specific neighborhood because this can suggest a poor neighborhood. On the other hand, it can be an indication of seasonal cycles.
- Neighborhoods with higher vacancies can result in landlords reducing their rents to get tenants. Conversely, the lower the vacancy rate, the better chance you’ll have for increasing rental rates.
- Find out what’s expected regarding the growth of an area in the future. If an area is projected to grow considerably within the following five years, this can mean higher taxes, which could possibly lead to future bankruptcy.
- Look for areas where there are growing opportunities for jobs as this can attract more tenants. What’s more, be alert for any new major businesses that may be coming to an area as this can cause an increase in people flocking to it.
- The U.S. Bureau of Labor Statistics can give you a reasonable idea of how areas rate, regarding employment statistics.
- Check an area’s likelihood for natural disasters, such as flooding and earthquakes because this can entail additional insurance that can be subtracted from your rental income.
- Stop by a potential neighborhood several times on various hours and days of the week so that you can observe what goes on with neighbors or spot any possible issues an area may have. What’s more, consult with area homeowners and renters.
Finding the right location for buying investment properties is only one aspect of being a successful landowner. You can acquire a wealth of knowledge by enrolling in the Landlord Property Management Academy. Please contact us and let us explain what we have to offer.