What are the most important factors when picking rental properties that will actually be profitable?
1. Location, Location, Location (Always #1)
After being in this business for over thirty years, the most important factor in acquiring a good real estate deal is location. Selecting the right neighborhoods makes a difference. Will you self-manage or have professional property management like Pyramis Company in San Antonio on hand to deliver superior returns and generate truly passive income?
2. Cash Flow (Could also be #1)
Cash flow is one of the most important factors to consider when purchasing a rental property. If there is no cash flow or the cash flow will not cover anticipated expenses, does it make a good income property investment? I’m thinking not! Other factors to consider when doing this analysis would be:
- Future income
- Finding a renter
- How long will it take to get a property in “rentable” condition
- A professional property management company. A good third-party management company is worth their weight in gold.
3. Condition of Property
Property condition is where most real estate investors damage themselves. New property investors all too frequently underestimate how property condition can impact their investments. Some will allow themselves to be frightened off investing in otherwise tremendous property investments.
Just as important is the ongoing property maintenance and costs. Depending on age, quality of building, and other factors, how much will need to be set aside for capital reserves each year?
4. Property Management, Pyramis Company is the answer
Don’t overlook the need for professional property management. Perhaps even more important than the property itself is the management. A horrible house in a deeply depressed area can yield amazing returns with good management. On the other hand, even the best home in the nicest neighborhood might deliver horrendous results with poor management. We can bring the expertise to manage your property for excellent returns. If you’re buying in an area that we do not service, Pyramis may be able to help you in locating a qualified property management company. If we don’t have any recommendations, we can certainly help with the questions you need to ask a prospective management company. It’s wise to have your property manager identified ahead of making that acquisition.
5. Property Value
Property value is important. I would recommend getting your property manager involved here as many sales agents have one thing in mind, closing the sale. A qualified property manager can confirm the data being provided by a general practicing sales agent. Appreciation is good, and it may not make sense to buy a brand new home. Also, recognize how valuations are changing in many areas.
6. Area Trends
What do area trends predict for the future performance of this property? What new developments are coming? Is the population growing? What about jobs and wages?