Most property investors keep an eye out for a new investment opportunity. However, before purchasing a new property, real estate investors must analyze several factors that go into an ideal investment property. One of the most important things that should be on your mind when choosing a new rental property is ensuring it will generate the ROI you need to meet your goals. As you review the numbers and analyze a potential investment, Metro Detroit property management companies will tell you that the neighborhood plays a big part in a property's success.
If you're wondering, "what does a property manager do," one of their most significant roles is to help investors run the numbers (including estimating the ideal rental rate) to avoid bad investments. Local property managers know the Metro Detroit area, so they will have excellent insights into what goes into a perfect investment property. Today, the best property management company Detroit offers shares more about questions a property owner should ask about a neighborhood before buying a new property!
Amenities surrounding a neighborhood play a big role in how readily you'll be able to find tenants and rent the property. Renters are attracted to properties near critical resources and will sometimes even pay more for a rental home in an ideal location. In-demand neighborhood amenities include:
Access to great schools
Nearby entertainment venues
Boutiques and chain stores for shopping
Restaurants for fine and casual dining
Easy access to highways
An excellent rental home in a neighborhood that doesn't offer proximity to amenities like these can experience long vacancy times and income loss.
Even with the recent shift to more people working from home, it's still a great selling point if your property is near ample job opportunities. When searching for properties, check the job market, the types of businesses near the property, and how workers in the neighborhood access highways and transportation to get to work during the week. Some areas may be convenient for jobs but are not businesses that people want to live close to. For example, if it's near a large factory that emits a lot of smoke and smog, people may not want to live near it.
When considering rental properties near a college or university, consider the types of renters you'll likely deal with. A property owner will likely see more younger college students wanting to rent your property than responsible working adults or families with kids. As a result, you may find it challenging to keep a college-student-friendly rental unit filled year-round, leading to a few months without rental income during the year.
Rental homes usually fall into one of three neighborhood categories: Class A, B, or C properties. The best property management companies advise that different property classes can affect your ROI and long-term investment success.
For example, Class A properties are usually in pricey high-end neighborhoods and may have higher taxes and insurance. Some may even have HOA fees attached, making the property more costly to operate. With a Class C neighborhood, property owners must consider higher crime rates and low-quality schools that could lead to frequent vacancies.
A property management company often recommends that Class B neighborhoods can be excellent areas for investments. These communities include moderately priced homes and appeal to a wide range of renters, including families and blue-collar workers with steady employment. These neighborhoods are also ideal because the schools and amenities are good, the crime is relatively low, and the taxes and insurance are not too high.
Before closing on a new rental property investment, it's vital to look for red flags in the neighborhood. For example, some jurisdictions make it difficult for investors to conduct upgrades or remodeling on a home due to the red tape involved.
In other areas of Detroit, investors may be required to fill out a lot of paperwork, pay high permit fees, and basically "jump through hoops" to get things done. These steps can make it challenging for investors to move ahead and meet ROI goals. To learn more about the requirements for rental property owners throughout Detroit, work with local property managers to navigate rules and regulations.
Do you have a new investment property in mind? Before putting in an offer or signing paperwork, get in touch with a Detroit property management company to learn more about the neighborhood and analyze the property's potential. Own It Detroit has years of experience in the Metro Detroit area. We can help you find ideal locations for investment properties and help you make smart investments! Reach out soon to learn more about our professional property management services.
What should you look for in an ideal rental property? Download our free "Biography of the Perfect Investment Property!"