Before rushing in to become a rental property owner, take time to check out the top five factors that will make or break your decision.
While there are many factors that play into assessing the market value for a rental property in your area, there are five topics that top the list. Take time to look at them closely.
The timeless axiom in real estate lives on today: location, location, location. Tried and true, the location decision will impact most of the others to follow. Indications of a healthy rental market include a healthy economy, job opportunities, new home construction, unemployment rates, household income, affordability, and anything that could influence a renter’s decision to live in the area. Invest in an area that people want to call home and where demand will be consistent at least for the foreseeable future.
It’s unavoidable that the local economy will affect the viability of a rental property. Consider these factors when looking at the location of your prospective rental property:
- Number of sales of existing homes
- Prices of existing homes
- Volume of new construction
- Local economy
- Population trends
- Unemployment rates
- Job growth
- Median household incomes
Positive trends within each category is a sign the location is a good investment. You may not find all of these factors working in your favor, but even a few can influence a rental market favorably.
Vacancies & Listings
Pay attention to the ratio of vacancies relative to the number of listings in an area. A high number of listings could mean that either the neighborhood is currently in the middle of a seasonal cycle, or it is trending downwards. That’s why learning the listing ratio in a particular area is in your best interest.
Note the vacancy rate of the area. If the vacancy rate is low, it could be a good sign that demand is intact. However, high vacancy rates could suggest poor conditions and lower demand could force landlords (that’s you) to lower rates to attract good tenants.
It usually means a healthy market when an area has future development projects in the works.
A noticeable lack of development can be a sign to look elsewhere. Contact the local municipal planning department to get information on new projects underway or coming soon.
Good Rental Markets for 2021
Three of the best places to buy rental properties in 2021 are Orlando, FL, Huntsville AL, and Dallas, TX. Job and population growth and affordable housing have fueled the surge, along with career opportunities and a higher quality of living.
Tech has bolstered growth in San Jose and Seattle and start-ups are finding homes to lay down roots in Austin, TX and Raleigh-Durham, NC.
Rental Market in Dallas, Texas
On average, a single-family home in Dallas costs about 3.5% less than the national average. Affordability is a primary driver in this market. Many companies have relocated from California to Dallas for its lower taxes, fewer business regulations, and a significantly lower cost of living to employees. As a result, Dallas has seen incredible job growth, with a 2.7% increase this past year. The population has seen a growth of about 17%. This, compiled with attractive affordability, has made Dallas one of the best rental markets for rental property investors.
Rental Market in Austin, Texas
Austin has become one of the biggest real estate markets of 2021. Apple’s decision to build a $1 billion campus in the area has been a plus. For real estate investors Austin could make great investments. Home building prospects are also promising with the median home price currently hovering around $296,000.
If you need advice about investing in rental property, contact Cousin James Management. We do much more than property management, although we do that very well, indeed. We have years of experience in real estate and can guide you in your quest to become a rental investor. If you are a rental investor already and need help with property management, by all means, contact Cousin James Management today. From maintenance to locating and vetting your tenants, we make your job as a property owner much more enjoyable and stress-free.