What to Look for in Rental Investment Properties

• Think location. There's an old real estate saying the three most important things to look for in real estate are location, location, location. Look for rental investments in areas convenient to major employers, schools, shopping and public facilities, and transportation.
• Consider the price carefully, and the amount of rent you can justifiably charge. If you hope to charge more than the cost of the monthly mortgage, insurance and taxes on the home, you should be careful to invest no more per month than the local rental market can bear. If your goal for rental income to “break even” or perhaps less as the property increases in resell value, price becomes somewhat less important.
• Think about future resale value. Properties in growth areas can rapidly increase in value, turning your rental property into a prime resale opportunity. Investing in low growth areas can provide a steady stream of renters, without a major growth in equity.
• Consider the neighboring homes, and how well they are maintained. Even one home on the block that is poorly cared for can drive down potential rental income
• Look for properties with solid construction. Even the best tenant will be more likely to put wear and tear on a home than a home owner. Try to find low-maintenance properties that will stand up to the wear and tear of renting.

You should also consider how active you can or want to be in the oversight and upkeep of your rental investment properties. If you live nearby, it can be relatively simple to stay in touch with tenants, and to keep an eye on your investment. If you lack the time, or your property is some distance away, you may wish to work with a property management firm.

Learn More About Investing in Rental Properties