Forget about the possibility of a recession: Real estate investment remains strong. Some investors see real estate as a way to inflation-proof their portfolios. And whether you’re investing in your first property or eleventh, you need to keep your profit margins strong. Ultimately, that means ensuring every investment property you own can fetch high rental rates.
As you explore the listings, look for the following hallmarks: They indicate that you’ll be able to ask for above-average rent from your tenants as long as the property is well-maintained.
1. Properties in gated communities
Found an opportunity to invest in a single-family house or townhouse in a development with gated community access control? You may have hit the jackpot.
Gated communities have a reputation for being not just safe but also desirable. That’s a huge advantage for you as a landlord. If you’re able, check out the rent for other units and homes in the gated community. Then, price yours at the top to attract applications from eager people looking for the security that comes from knowing that their neighborhood isn’t accessible to all.
2. Properties in walkable areas
While it can be tempting to purchase a low-priced property off the beaten path, you might need help to find renters. Many people who aren’t ready to buy properties—think Gen Z and Millennial professionals—like to be located in or near urban or suburban centers. Consequently, they’ll be more likely to swap higher rents for the ability to head to a nearby coffee shop or stroll to the organic grocery store.
Is a neighborhood walkable? Take a quick hike or have someone do it for you if you’re investing from afar. Understanding the community layout will help you “sell” it to applicants ready to move.
3. Properties with work-from-home spaces
Approximately 58% of people can work from anywhere, at least from time to time. The most common remote work spot is the home. However, not all apartments, houses, or condos have a dedicated space that screams, “This is the perfect place to call your home office!”
When seeking properties, you expect to rent to individuals and families. Keep an eye out for virtual working rooms. Or, think about converting a large closet, pantry, or other space into the ideal location for a desk, chair, and other office must-haves. Be sure that your spot includes electric plugs for fast connectivity. Work-from-home tenants will appreciate being able to plug in and get started, which can bump up your rent.
4. Properties that have fenced-in areas or dog parks
Many landlords are reluctant to allow tenants to own pets. Before you adopt a strict “no pet” policy, consider that nearly four out of 10 households include a dog. Consequently, plenty of would-be renters are probably bringing Fido or Spot in tow. Can you afford to turn them away?
Most pet parents expect to pay more for rent. This gives you the ability to raise your rent and security deposit appropriately. You should screen your tenants carefully and limit the number or types of dogs or other pets. Nevertheless, remain open to having an animal-friendly attitude. Your attitude could wind up making you more money in the long run.
5. Properties that can be turned into multiple units
Generations ago, wealthy families often built large homes within urban centers. Today, that’s less common, which is why landlords transform significant properties from single-family homes into multi-family homes.
Not all properties can be easily or cost-effectively modified, though. Your best bet is to find a trustworthy contractor who can conduct a walk-through with you. Together, you can look for innovative ways to divide a home into two or more apartments. Not only will you get more rent, but you’ll be able to appeal to a broader swath of renters if you offer rental units of differing sizes. Explore the benefits and insights from this recent study to make informed decisions for your next investment.
In the end, it comes down to balancing your requirements, wants and needs with your financial responsibilities. Taking the time to learn about your options can lead to a rewarding investment, whether one property or an entire portfolio. Be sure to educate yourself to continue investing in suitable properties for you and your goals.
