Rental property investment | Real estate property listings in Detroit (2024)

Here’s How You Can Identity a Profitable Rental Property

by admin

Posted on December 7, 2016

Rental property investment – Deicing to invest in a real estate property and actually buying your first rental property is a lot of work but it doesn’t end there because at the end of the day people buy these properties to give them out on rent in order to generate a steady cash flow, so how do you buy a property that can be easily rented? Or in other terms how to identify a profitable rental property. Let’s find out.

But before making your move there are few things that you need to consider, first decide the place of investment based on how much time you can spend to manage the property. If you intend to manage it yourself actively then the place of investment should be closer to where you live and if you cannot spare enough time to manage it, you should ideally hire property management firm or agents to manage it for you and in that case your proximity to the property doesn’t matter. Now let’s take a look at how one can identify a profitable rental property and real estate property listings in Detroit.

1) Neighborhood – Locality of your investment decides the kind of tenants you will get and how often you will face vacancies. For example if your property is near a university your pool of probable tenants will be comprised of students and you are bound to face vacancies during summer and winter breaks during which your cash flow will reduce.

2) Proximity to Schools and Workplace – Tenants may or plan to have children and such tenants will always prefer a property that’s close to a good school but having a property near any school won’t make it, take caution and check the school’s reputation and performance and only invest in a property that’s close to a decent school, if at all you decide to buy a property near a school that is.

Just like how tenants would like to have their home near a school they would also love to have their home near their work place for their convenience, so target your investment in an area that is close to commercial areas filled with offices.

3) Property Taxes – Property taxes are uneven and as an investor who is planning to make money through rents you have to be aware of how much money you will lose through taxes but high taxes aren’t a bad thing though if your investment is in an excellent area with long term tenants. Talk to homeowners from the targeted area to know about the tax rates.

4) Crime Rate – No one would want to live in a place with criminal activity, check for criminal records and look for vandalism rates, serious and petty crimes and other criminal activities relevant to the area before you make your investment. You can procure these criminals statistics from public records or from the police.

5) Volume of Listings and Vacancies – If there’s an unusually high number of real estate property listings in Detroit for a given neighborhood, it is either due to seasonal cycle or a neighborhood gone bad due to certain factors. Make sure you figure out which is which before you invest and also make sure if you can cover for seasonal fluctuations. Also vacancy listings can give you a fair idea of how good a neighborhood is, high vacancies will force landlords to lower rentals and low vacancies allows landlords to higher the rentals.

6) Rents – At the end of the day rental income from the property is everything and thus you need to know the average rent in your area of interest, if charging the average rent isn’t enough to cover your expenses like mortgage, taxes etc then keep looking. Always make sure you have researched about the area well enough to know where that area is headed in the next 5 years because with major improvements in the area can drive the property taxes higher and what is affordable now might mean bankruptcy in the future.

7) Natural Disasters – Insurance is an inevitable expense on your property that you have to subtract from the returns. If your property is in an earthquake or flood prone zone the insurance can eat away your rental income.

8) Amenities – Tenants love to pick a neighborhood that is close to amenities like shopping malls, cinema halls, restaurants, bus stations etc because who wouldn’t? Thus target your investment in such an area which is filled with amenities and by doing so you can gamble a little with higher rental prices.

Always make sure you consider the above given suggestions when you are planning on investing on a property in order to make it the best real estate property for yourself and the best rental property on sale for your tenants and do remember to have realistic expectations and commit yourself to put a lot of research and footwork to get the work done.

Tags: Real estate property listings in Detroit, rental property investment