The Big Five

Rental Income - How much rental income is the property generating now, or will it generate in the future? This is THE key factor. If you’re thinking about purchasing a particular property, be sure rent rates are competitive with comparable units in the area and will at the very least cover mortgage, taxes, and expenses.

Location - Is the property in a desirable location and what is the vacancy rate like in the area you would purchase? Buying property in a more desirable location will affect the time it takes to find new tenants and the type/quality of applicants you’re attracting. For example, buying near a college campus may mean that your tenant pool is filled by inexperienced renters more likely to cause damage. In contrast, buying within a city center experiencing rapid business growth, you might expect young professionals with established income, credit, and rent history.

Amenities - Related to a property’s location are the local amenities on offer. Renters love to be near parks, shops, cinemas, and other features. If you’re considering an investment property, take into account the amenities in the surrounding neighborhoods. You’ll have an edge up on comparable rentals if you’re listing in a more charming and alluring part of the town or state!

Property Taxes - You’ve got to consider the taxes when deciding on an investment property as well. High taxes aren’t always bad, especially in desirable locations where you may be able to find long term tenants, but check the rates before making your move to purchase. You can find all the tax information for individual towns/cities fairly easily. You should also try and gauge whether or not an area is declining or improving. If local businesses are leaving a town/city, individual property taxes will likely go up soon. If tax rates rise too quickly, they can be the difference between a solid investment and filing bankruptcy!

Useful Unit Layout - Most renters are looking for functionality and affordability. Rentals that have a quirky or unique layout may seem interesting but usually aren’t a tenant's first choice. Consider a situation where two roommates are looking to rent together and come to see your two-bedroom rental. They’re unlikely to choose it if one bedroom is built for a grown adult while the other is the size of a small closet with six and a half foot ceilings! Purchase property that is desirable to the type of tenants you expect to fill it with.

Good investors will always consider these elements when purchasing a new rental property. Most cities have wonderful neighborhoods and properties that would make smart investments, but you’ve got to be willing to put the groundwork in first and do the local research necessary. Robert C. White & Company has helped investors across the state to manage effectively and find more property to add to their portfolios. Happy Hunting!

If you’re looking for more information or would like to speak with an RCW agent/property manager, click here!