If you are a seasoned real estate investor, then you know just how vital property location is. However, if you are new to rental property investing, you may want to learn about the importance of learning how to choose a successful rental property.
Just as you can probably imagine, there are many reasons why location matters for a rental property. First, you want to purchase real estate in a safe area that offers a lot of opportunities for future tenants. If you purchase a rental home in an area that is known for its high crime rate, then it may be a little more difficult to find tenants willing to live there, especially those with families.
If you’re unsure of what to look for in your next rental property investment, don’t worry. We’ve created a guide to help you determine how to choose the best neighborhood for your next real estate purchase.
Research the Area
The first step in finding the best area for your real estate investment is to thoroughly research the neighborhood before investing. Luckily, there are tons of ways to gather information. For example, you can talk to others in the community, visit the district yourself, and read articles online or in the newspaper.
Turning to these resources can help you decide if the area is worth buying rental property in. After all, you want to invest in real estate that is safe, profitable, and desirable to future tenants. Make sure that your research is rigorous and thorough before you make your investment. This will ensure that you have the time to make the best-informed decision.
Talk to Community Members
Talking to others in the community can be a great source to gain insight into the neighborhood. Fellow community members typically have the inside scoop on what’s going on in that particular area. Don’t be too intrusive to your potential neighbors, but take the time to learn more about the site and what it has to offer. An easy way to do this is by joining in on community events early on in your buying process.
Listen closely to the crime rate or potential business opportunities coming to the community to determine it’s reasonable to invest. Similarly, community members can tell you their experiences with schools in the area, the best restaurants, grocery stores, and future job opportunities that may arise. Frequently, engaging in the community early on can give you a good taste of what living there may be like.
Visit the Neighborhood Yourself
Aside from talking to established members of the community, you should also periodically visit the neighborhood yourself. Drive through the area during the day and at night to get a full mental picture of the surroundings. Tenants are more willing to live in a neighborhood that doesn’t have loud neighbors or large parties. Similarly, nobody wants to live in an eerie run-down area that doesn’t look welcoming at first glance.
The visual and auditory aesthetics of a neighborhood are more important than you may think. If the area is unwelcome, run-down, or constantly bustling with large parties, tenants may be a bit hesitant to rent a home there. If you are looking for a home that will be inclusive for families, other things to consider include walking paths, parks, and reputable daycares that are nearby.
Find News About the Area
Lastly, if you still need a little more insight into the neighborhood, it could be wise to do research online or look through the local newspaper. This will allow you to see some of the recent happenings in the community, whether they are criminal or otherwise newsworthy.
If you’re looking through a physical newspaper, look in the jail log or crime section to see if the consistent criminal activity will affect the area in which you’re looking to buy. If you notice that there is a high crime rate in the area, you may want to re-think your decision. If you’re looking online for more information, look for what other people are saying about the community and research the events and organizations in the area. Google is a great resource for finding specific information on the community.
Dig a Little Deeper
While it’s great to reach out to community members and look through the news for more information on a certain neighborhood, there’s still more research you can do. Using web-based information tools such as Trulia can provide you with much more information than what you will get by just using Google.
Looking at websites that are specifically used for real estate information can provide you with a greater breakdown of all the things you are looking for.
Using these internet tools can allow you to see:
• A breakdown of crime incidents and estimated risk
• Nearby schools and access to all levels of education
• Public transit resources and estimated commute times
• Amenities in the area such as restaurants, grocery stores, and shopping centers
• Average prices of homes in the neighborhood
• Potential risks of weather hazards such as hurricanes, tornadoes, earthquakes, and floods
• Demographic information of the area based on married/unmarried couples, average age, percentage of college graduates, and more
Besides the information you can find on real estate websites, you may want to look into past property taxes in the area. You can gauge how much money you’ll have to pay in taxes each year by doing this. Similarly, you can explore the local job market and learn about potential job opportunities that could be beneficial to future tenants. Keep in mind that if the neighborhood has a high vacancy rate and high turnover rates for rental properties, there may be some underlying concerns to look into.
Before investing in real estate for any purpose, it’s wise to do research on the neighborhoods and community activities to ensure that your investment will pay off. Reach out to community members, visit the neighborhood, and investigate online to gather all the relevant information you may need.
