Top 10 Signs of a Profitable Rental Property Investment - Rest Nova Site

Top 10 Signs of a Profitable Rental Property Investment

Top 10 Signs of a Profitable Rental Property Investment

The goal at the back of every investor’s mind is to make a profit. Thus, every potential property owner must learn the best way to identify a valuable opportunity. After all, the last thing you want is to get stuck with a money pit that requires several  DIY projects to look inviting.

Do you know which type of rentals to avoid? Or how to tell when a house has potential. Stick around till the end of this article to find out.

Top 10 Signs of a Profitable Rental Property Investment

1.   Property Metrics

One of the first indicators of a profitable property is its financial metrics. These simple calculations can inform a landlord on how much a property will earn or cost to maintain. For example, the one percent rule is an excellent way to budget for annual expenses. On the other hand, your cap rate gives a clearer picture of possible rental yield.

2.   Property Taxes

Property taxes are a mandatory fee the local governments impose on owners. They vary from one municipality to the next and are also dependent on the rental property you possess. Since they’re a compulsory expense, they play a significant role in determining your net profit.

3.   Location

Location is one of the essential determinants of a property’s profitability. Many signs feed off your rental site, so you must get it right. Modern renters value convenience and would rather pay more to stay close to work and school. Also, amenities like restaurants, bars, and malls within a short distance of your home can give you a larger tenant pool. Professional Property Management of Northern Virginia can provide comprehensive property management services, including screening services to help you find the more qualified candidate.

4.   Crime Rate

For most tenants, safety is often their number one priority. Thus, safer neighborhoods are generally more expensive and profitable for the owners. Before investing in any area, you should ask about the crime rate. What’s the frequency of burglaries and car jackings? It could be a selling point if you purchase a property in a neighborhood with record-low crime rates. On the other hand, property owners where crime is higher need to work harder to attract and retain tenants.

5.   Occupation Opportunities

Few things are as annoying as a long commute to work. Hence many professionals would prefer to stay close to their office or the central business district. Neighbors around large companies and factories also tend to get many tenants working in those places. However, if your target area is far from such sites, you can make it work if the commute is easy.

6.   Good Schools

If your target tenants are families, then you should aim to buy properties around good schools. Parents always want the best for their kids and will sometimes move to a different neighborhood for better education opportunities. Houses within walking distance from local schools often track renters looking for extra convenience.

7.   Amenities

Besides work and school, people like to be close to social amenities. Walkability score is a real estate term that grades a property based on its access to transportation, leisure, and essential locations. The higher your score, the fewer tenants need a car to complete every errand. Such tasks could include going to the dry cleaner, picking up groceries, and going to the gym. Locations with better walkability scores are often more profitable.

8.   Vacancy Rate

Owning a rental property is only profitable when your tenants pay rent. Thus, it’s crucial to invest in areas where the vacancy rates are low. Higher listings could mean a neighborhood is declining, forcing owners to lower their rate below the rental average. However, some places are affected by seasonality. So if you’re investing in a vacation rental, you should analyze the peak periods, as off-season might be misleading.

9.   Risk Exposure

Risk exposure refers to the likelihood of your property sustaining damage from the elements or disaster. For example, areas in flood-prone zone tend to require a higher insurance premium. Additionally, tenants try to steer clear of such places to avoid getting caught up in a harsh storm or hurricane.

10.                   Future Development

Finally, it would be best if you tried to look beyond the current metrics. If a neighborhood shows signs of emerging development, then the property value in that area will rise too. That means you can charge higher rent later or make a great deal if you want to sell.

Research Tips before Choosing One

1.   Ask Local Experts

Identifying prime property is the best way to avoid making a poor investment choice. If you’re not familiar with the land, it might be difficult for you to locate such an area yourself. Thus, it would be wise to consult a local expert. You could ask friends, agents, or other real estate professionals.

2.   Make a Sale Comparison

During house hunting, you’re likely to have two or more options. If your finances force you to choose one, you should select the most viable option. A thorough sales comparison that compares all properties can help you arrive at a decision.

3.   Add up Costs of Ownership

Before you commit to any house, you should consider the cost of ownership. Although the purchase price makes up a significant proportion, there are other metrics you should account for. That includes agent fees, closing costs, property management fees, and expected expenses.


It takes a lot of work to determine which properties have the most potential on the market. However, you can make better financial decisions by knowing the top 10 signs of profitable rental property investment. Understanding how metrics like location, crime rate, and exposure to damage affect your potential income puts you ahead of other investors.

During your research, if you’re unfamiliar with the lay of the land, you should ask local experts, compare several properties, and sum up the cost of ownership.

Although, you should remember that identifying and managing a profitable property are two separate things. Thus, to maximize your investment’s potential, you should consult a professional property management company.