How to Determine If a Rental Property Is a Good Investment

When you’re investing in Charlotte real estate or rental properties in Matthews, Ballantyne, Kannapolis, or anywhere in North Carolina, you need to know how to determine whether a potential property will make a good investment. 

How do you know?

When you’re determining whether a rental property is a good investment, you have to decide whether a tenant will pay what you need them to pay in order to live there. Will your rental value be where you need it to be? Will the property appreciate in value as time goes on? Is the neighborhood desirable? 

There’s a lot to consider. 

A good investment property will be desirable to tenants. There are a lot of formulas and equations that can tell you about the profitability of a particular property. You can analyze your return on investment (ROI) and your cash on cash value. You can project what you’ll earn in five years or 10 years. But, the bottom line is that you’ll only make money on a rental home if there is a pool of people willing to live there.

We want to help you ensure your rental property is a good investment, whether you’re thinking about buying or you’ve already invested, and you’re tracking the progress of your asset. 

Here’s how to determine if a rental property is a good investment. 

Location and Identifying a Good Investment Property 

Location is everything; this is a message that’s been drilled into real estate investors, buyers, sellers, and anyone interested in real estate. It’s all about where your property is located. This will be one of the most important indicators of whether you’re making a good investment. 

When you’re choosing a rental property, you have to make sure that it’s in a desirable neighborhood. 

Where do tenants want to live? 

• Tenants prefer to rent a home that’s close to good schools.
• Tenants want to be close to shops, restaurants, grocery stores, and other conveniences. 
• Tenants don’t want to be too remote. 
• Tenants also don’t want to live in an area that’s heavily commercial or industrial. 

Tenants want a neighborhood with a sense of community.  

A well-located rental property will bring in higher rental values and qualified tenants, which leads to positive cash flow and an impressive return on your investment. Location also impacts vacancy. You’ll have fewer unoccupied days when your property is in a desirable location.  

Buy a property in a neighborhood where people will want to live. In the Charlotte area, that could mean an older established neighborhood or a new construction community with amenities and an HOA. Think about areas like Monroe, Harrisburg, Wesley Chapel, and Midland. 

A good investment property is in a neighborhood that’s easy to reach and offers a direct route to work, school, entertainment, and recreation. Parks will help and so will things like hospitals, libraries, movie theaters, and shopping malls. Other great locations for investment properties in the Charlotte area include Indian Trail, Stallings, Mooresville, Concord, Pineville, Huntersville, Waxhaw, and similar neighborhoods. 

Good Investment Properties are in Good Condition

Homes with very low price tags are tempting to invest in. 

However, we can tell you that your best and most profitable investment property is probably not a fixer upper. 

For some investors, this is part of their investment plan. Maybe you’re hoping to buy cheap properties and then fix them up before you rent them out for top dollar. If that’s your goal, you’re going to intentionally look for those specific homes. Go for it. 

When this is not your specific strategy, however, you’ll want to identify investments that will be ready for the market quickly. You don’t want to put a lot of work into them before you rent them out. 

A lot of time and money will be spent renovating that house with the low price tag, and not only do you have to consider how such work will impact you financially, you also have to think about the delay in getting the home on the market. You won’t collect rent right away. It may take months. 

Instead of those fixer-uppers, look for an investment property that’s in good condition. You’ll need a clear idea of how much maintenance it will require before you rent it out and as you’re renting it out. 

When choosing a good investment property, you’ll also need to think about long-term planning. Consider the age of the roof and the appliances. You need a well-maintained property in order to attract stable, long-term renters. 

Work with a Local Property Manager to Identify the Right Investment 

You’ll know you’re choosing a good investment property when you work with a team of local experts who understand the market, the competition, and the tenants who will ultimately rent your home.

When you’re trying to decide if a particular asset would make a good and profitable investment as a rental home, don’t hesitate to reach out to a property manager. A local Charlotte property management company that understands the local market can be an invaluable asset. 

A number of investors will wait until after the property has been purchased to reach out to a property manager. It’s easy to assume that property management isn’t necessary until the investment has already been purchased. 

But, we can help you even before you buy.  There’s no reason not to leverage our expertise when it comes to understanding rental values, measuring what you’ll have to spend on repairs and renovations, and determining who will make your ideal tenant. 

Don’t wait. If you contact a management professional before you buy, you can choose a better investment property. You can also tap into our professional network and resources. We can put you in touch with brokers, lenders, insurance experts, legal professionals, and even vendors and contractors who can help you get the property ready for the rental market. 

Ready to find a good investment? Please contact us at Wess Cason Realty. We provide real estate and property management services in Charlotte and the surrounding areas in Mecklenburg, Union, and Cabarrus County.