Top 5 Features of a Lucrative Rental Property

Many people are looking for ways to earn a passive income, and one of the best options out there if you’ve got the startup capital, so to speak, is rental property. Whether you’re renting out a granny flat in your basement, you’ve purchased a duplex to live in one half and rent out the other, or you’re buying a totally separate piece of property from the one that serves as your primary residence, you might be keen to own a property that is paid for by the tenants, giving you free equity in the process. However, you need to make sure that you select a property that is going to end up paying off. And whether you plan to use it for long-term leasing or you’re interested in listing it on a site like vrbo.com (vacation rental by owner) to see if you can earn more income that way, there are a few features you’ll need to look for if you want your rental property to end up being lucrative.

  1. Location. This is generally the number one consideration for any business undertaking, and since you plan to make money on your property, the location is of paramount importance. For example, you’re bound to make more money on a rental property located in a city, and this is true whether you want to rent it to long-term lessees or use it as a vacation rental. Urban centers are not only where the most jobs tend to be found, but also where the majority of activities are. On the other hand, if you happen to live in some kind of island paradise, remote locations that take full advantage of secluded beaches, for example, might be fairly lucrative, as well. And of course you’ll want to consider things like the relative state of the neighborhood, crime statistics, and so on in your reckoning.
  2. Size. You could go a few ways when it comes to the size of residence you plan to rent out. You could cater to the single-renter crowd with a studio or 1-bedroom place, but since most young people don’t make a ton of money, you might want to opt for at least two bedrooms, which would allow lessees to split the cost of rent with a roommate. Or you could opt for a three- or four-bedroom house with the goal of catering to families, who tend to be more stable renters than college kids, for example. You might also get a rather large house if you’re looking to do vacation rentals for large groups. The size of property you buy depends mainly on the demographic you’re looking to attract.
  3. Cost. The nice thing about cost is that if you’re able to rent the place out, you’re likely to come out even. If you pay a fair price for your property, chances are good that rental prices in your area are going exceed your mortgage payment. This means that you can set a median rental price and cover not only the mortgage, but also property tax and insurance payments. You might even have a little extra money to pay for annual inspections and maintenance on the property, with some spare change left over for you. But you’d better crunch the numbers beforehand and make sure that your rental property is desirable and likely to get rented out quickly.
  4. Modern home amenities. Although location is the main consideration, what’s inside your house is nearly as important as where it sits. Renters are going to be drawn to places that are in good repair, feature updated interiors, and have modern amenities like ceiling fans, Jacuzzi tubs, enough outlets to handle a modern homeowner’s demand, and energy-efficient appliances (should you choose to include them). Updated spaces with a few luxury items included are bound to bring you the most bang for your buck, supposing you don’t spend too much to get them in the first place.
  5. Area amenities. This may fall under the heading of location, but aside from the neighborhood your property is located in, you’ll need to look into what’s nearby. You may not have access to the same tools as a realtor with The Nordstrom Group, but that doesn’t mean you can’t use Google maps or get in your car and drive around to find schools, parks, grocery stores, restaurants, public transportation options, hospitals, and other area amenities that might appeal to prospective renters. Ideally, you should try to find a property that has access to such amenities within walking distance, or at least within a radius of just a few miles.

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