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Best Location: Investing in Rental Property? Maximize Your Income with These 5 Tips

Aug 17, 2007
If you are thinking about investing in property which you can rent out there are a number of things that you can do to make sure the property that you buy is a good investment and secondly that the property is always rented out.

The way to maximize your income is to make sure that you observe this formula:

Maximum income = (Highest rent + lowest default + lowest maintenance) x 12 months

How do you get all these things?- well its not easy otherwise everyone would be doing it, however here are 5 top tips that should put you in the best place to achieve your investment objectives.

1. Look for Economic Redevelopment Zones

Watch the national and local news for areas that have been really run down but something big has happened. It could be the announcement of a new Super Casino, new high speed rail link into a big city, the creation of a large inward investment -- think of what happened to property investments in Atlanta,GA when that city hosted the 1996 Olympics.

The development of a town as a commuter hub, the re-development of inner city areas into fashionable places to live are all great places to invest. Once the development starts happening, the Starbucks, Borders, banks and bistros all follow. For today's urban professional these are places that they will want to live- delivering good demand forcing rents higher and reducing the rest of rental vacancy periods.

2. College Towns

Places that are college or university towns are always high on any investors check list. Not only do they guarantee a regular influx of prospective tenants, the youth and energy of students rubs off on the rest of the town- they are happening places with loads of things to do, fun places to eat and good sports facilities.

University "towns" such as Columbus, OH (Ohio State), Tempe, AZ (Arizona State), or Austin, TX (University of Texas) represent solid places to invest as there will always be fresh potential tenants.

The one potential downside is that sometimes students may have difficulty in the transition from having good ole' Mom taking care of everything to taking care of that cleaning and cooking gig-- so check out your students to avoid high maintenance costs!

3. Commuter Towns

These towns may not be the prettiest but their very location means that they are always going to sought out by those workers who need to be within commuting distance of the work but either don't want to or can't afford to live nearer to their work. Places located near to Interstate intersections, great rail stations, local commuter airports, even ferry stations (think Staten Island!) are always going to be chosen by people who need to commute. The presence of the infrastructure allows them to commute further, quicker and more efficiently.

An additional investment benefit here is that as the prices of property nearer to the workplace rise, the value of your property will rise as workers look farther away to get the right accommodation for the money that they are prepared to pay.

4. The State Capital or a Regional Hub

The demand for property in a capital hub city is generally higher that the amount of property available for purchase or rent so although the costs of purchasing such a property may be high, you will be rewarded by high levels of demand, consistent levels of demand and good capital growth.

Look at neighborhoods within the city that have traditionally been seen as the poorer parts as renters will consider these areas which offer better value for money.

5. Your Own Stomping Ground

It's always worth considering places closer to home. Buying a place next door or just down the street from where you live may seem a strange idea but think about it- you know the place, the neighborhood, the facilities and the sort of people who would be your target market.

Having a place that you can literally keep an eye on and act as your own management agency will reduce your operating costs. Even if you decide to employ a management company to manage the property, a local property allows you to keep a watch on how they are taking care of your investment. Having a local property can be less stressful and time-consuming.

Keep these five principles in mind while doing thorough research before buying. Reviewing historical property price, number of residents and location can help you maximize the gain that you will have from reaping the rewards of your investment.
About the Author
Glen Franklin is a partner in Community Insight LLC, which operates www.MyDreamLocale.com. MyDreamLocale.com helps you find best places in your price range, compare cost of living and get real estate, school, demographic statistics for locales across the US. Relocation advice you can use.
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