What Makes a Good Rental Property?
Evaluating a Property’s Potential as a Rental
If you’re looking for a sound investment that yields a good monthly return, chances are you’re thinking about investing in a residential rental property. However, not all properties are created equal, and if you don’t know what your prospective tenants want, your investment could easily become a money pit. Here are 10 factors to consider when evaluating a property’s potential as a rental:
Regardless of whether you’re planning to rent to young professionals, families, or retired Baby Boomers, properties in neighborhoods with low crime rates and easy access to major roads are preferable.
2. Space and storage:
The more cubic feet per dollar, the better—within reason. It’s best to keep the space manageable in order to control heating and cooling costs. Make sure that in addition to living space, there’s also sufficient storage space.
3. Natural light:
Most tenants like spaces with lots of natural light. Large, insulated windows are a plus, since they let a lot of sunlight in without losing heat in winter or cool air in summer.
Rental units with thin walls, vents that carry sound, or windows located directly opposite a neighboring building encroach on tenants’ privacy. Make sure the property is reasonably soundproof and provides a realistic amount of privacy from adjacent units and properties.
If it’s a multi-level, multi-unit property, it should have sufficient properly functioning elevators to accommodate tenants who can’t or don’t want to use the stairs.
6. Well-equipped kitchens:
The kitchens should at the very minimum be outfitted with stoves, refrigerators, and fans—microwaves, ovens, and garbage disposals if possible. Depending on your target demographic, stainless steel appliances and granite countertops are always in high demand.
The newer the bathrooms, the better. Even if they’re old, they should be well maintained with at least a shower, toilet, sink, and vanity each.
8. Central air:
Most tenants prefer properties with central air instead of baseboard heating, radiators, or individual ACs.
9. Onsite amenities and outdoor spaces:
The property should offer amenities that make sense for the target demographic. In general, all properties should have on-site laundry rooms. Other possible amenities include an onsite gym, lounge, game room, play area for children, rooftop deck, pool, car park, bike parking area, and a dog park.
The best properties offer a good amount of security. That can mean anything from round-the-clock security guards to surveillance cameras to security doors. In addition, it’s critical that the property is up to code in regard to fire and carbon monoxide alarms, fire exits and escapes, and sprinklers.
Once you’ve found a property that meets all your requirements, then it’s time for the final consideration: price. You need to calculate whether you’ll be able to provide everything your tenants expect at a price point that first, matches their budgets and second, allows you to make a profit. If your calculations show that you can, then you’re ready for the next steps: obtaining financing and turning the property into an attractive, well-maintained rental unit.