Wondering Where to Invest in Real Estate? 3 Tips to Help You Decide
As a real estate investor, it’s important to know where to invest in real estate. There are many things to consider for your next real estate investment, but doing your research in high rental occupancy, high rentals in comparison to your payments, and a low default rate for tenants can ensure your rental property is successful and brings in more money than you’re putting out.
High rental occupancy
Looking into an area that has an abundance of available housing stock that is vacant could be good for you. With more vacancies, the purchase price will be lower, and you’ll be able to put more money into renovations. Researching cities that have continuous population growth is key to deciding where to invest in real estate. The following drive occupancy rates in most major cities:
- Employment trends and millennials
- New construction growth and the current housing supply
- Rent prices
- Location & desirability of rental properties
- The current condition of rental properties
High rentals in comparison to your payments
The end game in real estate investing is being able to have steady income once the construction dust has settled. It’s always better to have the rental payments cover the mortgage and any applicable taxes - in addition to saving money for any repairs down the road that the property might need.
Low default rates for tenants
When looking for where to invest in real estate, you want to avoid buying property in an area where rent payments are frequently missed by tenants. Obviously, you’ll want to fill your rental property as soon as possible, but you also want to fill with qualified renters. Looking at trending rental payment history data analysis will help you see the potential risks for an area that you’re interested in. The National Multifamily Housing Council has a rent payment tracker where you can see weekly trends for rental payments made, with comparisons to previous years.
When you want to get into the world of real estate investing, you need to be prepared to do your research. Timing matters as much as the purchase price does. You may find yourself in a situation where there’s a great prospect, but it might be challenging to close the deal because it doesn’t fit your investment criteria. You should act quickly, but wisely, not making decisions without first evaluating the market. Ask yourself - is the market growing, declining, or stable? Are you more interested in a long term buy and hold, or short term capital gains?
Contact Renovo today, and we can work together to help you decide where to invest in real estate.