Seven Tips: On Buying Profitable Rental Property

NEIGHBOURHOOD

The neighborhood in which you buy will determine the types of tenants you attract and your vacancy rate. If you buy near a university, chances are that students will dominate your pool of potential tenants and you could struggle to fill vacancies every summer.

PROPERTY TAXES

Property taxes likely will vary widely across your target area, and you want to be aware of how much you’ll be losing.

SCHOOLS

Consider the quality of the local schools if you’re dealing with family-sized homes. Although you will be mostly concerned about monthly cash flow, the overall value of your rental property comes into play when you eventually sell it.

CRIME

No one wants to live next door to a hot spot of criminal activity. The local police or public library should have accurate crime statistics for neighbourhoods. Check the rates for vandalism, and for serious and petty crimes, and don’t forget to note if criminal activity is on the rise or declining.

JOB MARKET

Locations with growing employment opportunities attract more tenants. If you see an announcement about a major company moving to the area, you can be sure that workers in search of a place to live will flock there.

NUMBER OF LISTINGS AND VACANCIES

If a neighbourhood has an unusually high number of listings, it may signal a seasonal cycle or a neighbourhood in decline—you need to find out which it is. This may cause housing prices to go up or down, depending on the type of business involved.

FUTURE DEVELOPMENT

The municipal planning department will have information on developments or plans that have already been zoned into the area. If there is a lot of construction going on, it is probably a good growth area.