If you’re thinking about investing in a rental property, now is a better time than ever. Many people are putting off buying their first homes until they’re at least 30. According to M Report, the average age of homeowners is on the rise, especially in Florida, where Tampa homeowners have an average age of 58.3 years. Until they’re ready to buy, Floridians are living in rental properties like apartment buildings and mobile home communities.
However, not all properties on the market are a wise investment. Before you make an offer, confirm that it has the potential to deliver a reliable and ongoing cash flow. In this blog, we’ll identify 5 characteristics of a good investment property and how to spot them.
- Urban Location
While the idea of living in a remote beach house sounds divine, most renters want to be close to shopping malls, public transportation, and workplaces – all amenities that tend to make home buying in the area too expensive for them. Choose a property in a convenient location and you’ll rarely be short of tenants.
- Strong Job Market
Areas with strong job opportunities always attract more tenants. If you see an announcement about a major employer moving to the area, you can practically count on people arriving in search of work. Demand for rentals will be higher, so your apartment building or mobile home community may receive more applications than you can accommodate.
- Good School District
Many young families choose to rent while they save up for a home, so the quality of local schools is important. When possible, parents will pay more to rent properties in a desirable school district. Visit Trulia Neighborhoods to learn more about the schools in the area.
- Neighborhood Type
The type of tenants you attract (and your vacancy rate) will be dictated by the neighborhood. For example, if you buy an apartment building near a college, you’ll be full during the school year and dealing with summer vacancies. On the other hand, a quiet neighborhood with shops within walking distance will attract young professionals and families who represent a reliable source of rental income all year round.
- Rent is Sustainable
The goal of an investment property is to make money. The general rule is that if the rent you can charge is 1% of the sale price, it may be a good opportunity. For example, if a home is for sale at $250,000 and you know you can rent it for $2,500, consider it further. You also want the mortgage payment (insurance and taxes not included) to be less than 50% of the rent, or you won’t make much money over the long term.
Do You Need a Florida Real Estate Attorney?
It may take a lot of research and footwork to identify the right investment property but when it happens, a Florida real estate attorney can guide you through the negotiation and closing processes. At Atlas Law, we support property investors by providing solid legal advice and due diligence services that verify the quality of their new opportunity. To schedule a consultation, contact us today at (813) 241-8269.