What Makes for a Good Investment Property?
Posted: January 29th, 2021
It’s an interesting time to enter the Brevard County investment market. Historically low interest rates continue to empower buyers, giving curious homeowners a reason to keep an eye out for available homes in Brevard. Available properties are being scooped up fairly quickly in our area, but more opportunities are beginning to emerge as we collectively settle into 2021. What’s more, Brevard County continues to be a hot rental market, with aerospace and defense opportunities continuing to arise.
In a market like the current one, you need to move quickly to secure an available investment property; by the time it appears on your favorite house hunting app, there’s a good chance it already has a handful of offers. Still, you need to be confident that the investment property you choose will offer a good return on your investment. So, how do you identify one that’s worth your time and money?
Location Really is Everything
The familiar saying, “location, location, location,” holds especially true for investment properties. You want to select a home near the places that people want to go. Think critically about this part. For example, many first-time investors seek investment properties located near universities. While housing is always in demand for college students, you may find that you have a hard time filling vacancies over the summer.
Make a profile of your ideal renter. Consider their occupation, the size of their family, and so on. This profile will help you narrow down good locations from which to select a property. When you think you’ve identified a few potential neighborhoods, research their current vacancy rates; a neighborhood with a high vacancy rate doesn’t bode well. It’s also important to thoroughly vet your selected neighborhoods for their livability and amenities, as these will be among the main things your future renters will look for.
Keep in mind that different neighborhoods have different restrictions for rental properties, especially when there are Homeowners’ Associations or condo developments involved. Some require a minimum lease of 6 months; some restrict the types of pets your renters can bring with them. Be sure to get all of those details before you make your move.
Get to Know the Competition
To succeed in the rental market, you need to make sure to set competitive rent rates. Set the rent too high and you’ll never find a willing renter. Set it too low, and you’ll risk devaluing the home and not earning enough to save for emergencies. If you’re working with a real estate agent on your property search, they should be able to give you a competitive analysis of your selected location, featuring the rent rates of properties similar to yours. Just as it is with selling luxury properties, setting the correct price for your rental can determine your success.
But what makes the rent rate too high or too low? A lot of that goes back to your selected location. A single-family home right near the beach would probably be priced higher than the same home in a neighborhood near a power plant. Your location, the condition of the home, and nearby amenities are all factors in setting the right price. Learning more about similar properties in your area can give you a starting point when you run the numbers.
Account for Taxes
An investment property is an investment in the truest sense of the word. While you own the property, you’ll be paying the mortgage, property taxes, and other fees and expenses. As you most likely know, property taxes can shift from year to year. If, for whatever reason, the community your property is located in goes through financial adversity, they may raise taxes and leave you unable to keep up.
Ask your trusted real estate professional to offer you some projections about the futures of the neighborhoods you’ve selected. As experts on their communities, they should be able to offer you sound advice based on what they’ve experienced in the past.
Act When the Time is Right
Ultimately, the decision to enter the investment market is up to you! If you’ve done your homework and are ready to take the next step, get in touch with the team at Ellingson Properties. Call 321-750-7050 or use our MLS search tool to view available properties in your area.