Aspiring landlords may think that renting out properties is a quick, easy way to make a substantial amount of income.
However, seasoned landlords know the reality of the situation – lots of hard work (not to mention time) is required to achieve financial success.
You can’t just buy any property and rent it out – you have to make good decisions regarding both your properties and your tenants to run a highly profitable business.
Sometimes, that’s easier said than done.
If you’re feeling unsure about what factors determine whether or not a property will be profitable, read on – we’ll explain what Prince George’s County landlords should consider when buying a rental property!
6 Signs Your Rental Property Will Be Profitable
1. Local Attractions
No one wants to live somewhere that makes it inconvenient for them to run errands or find something fun to do on the weekends. That’s why a good property typically offers many local amenities to tenants, which include:
- Major city attractions – Many people find living near a large city appealing because it means they have easy access to both entertainment (movie theaters, music venues, etc.) and necessities (grocery shopping, post offices, etc.).
- Public facilities – Attractive public facilities like parks, trails, hospitals, and libraries can make your property more enticing because of the convenience of having those places nearby.
- Public transportation – Studies have shown that close proximity to public transportation (bus stops, for example) boosts the value of a home.
As a Prince George’s County landlord, consider the fact that Bowie does not have many restaurants, grocery stores, or nightlife attractions before you purchase a property there. Other cities within the county, like Laurel, offer quite a bit more for tenants.
2. Good Neighborhood
To determine whether or not a property will be profitable based on the neighborhood it is located in, ask yourself these questions:
- Is the property near a college (Prince George’s Community College or Bowie State University, for example) in a popular area for student renters? If so, you may need to prepare for summer vacancies when they go home or shorter lease terms as they may frequently change living situations and/or graduate.
- Is my property in a highly sought-after area? Chances are, you’ll experience a positive cash flow if you can keep a property in a popular area well-maintained. In not-so-popular areas, you may find it more difficult to remain profitable.
- If I plan on renting to families, are there great schools nearby that their children can attend? If not, consider finding a different property to purchase – parents often prioritize choosing good schools for their children before they choose a home.
Remember, when a tenant rents your property, they aren’t just paying for the home – they’re paying for the area they live in. That’s why it’s so important to choose a property in a desirable neighborhood.
3. Low local crime rates
Would you want to live in an area where you don’t feel like your family is safe?
Of course not – and neither do your prospective tenants.
In fact, a 2010 study showed that robbery and aggravated assault crimes influence neighborhood housing values, so make sure research the safety of the area where your potential property is located before you purchase it.
For example, if you’re a Prince George’s County landlord, you’ll want to keep in mind that crime rates in Laurel are higher than those in Bowie. That doesn’t mean you shouldn’t purchase a property in Laurel – it just means you may need to do a bit more neighborhood-specific research before you commit to it.
4. Infrequent natural disasters
As a landlord, you already know that getting insurance is absolutely necessary.
But have you ever considered that properties located in areas prone to natural disaster may cause you to pay higher insurance rates?
In Maryland, hurricanes, floods, tornadoes, and winter storms occur from time to time, so consider researching the area where your property is located to determine the likelihood of a natural disaster there – doing so could help you save money on insurance costs.
Tip: Use Trulia’s map tool to look up your property and discover the frequency of natural disasters in that area (you can also check crime rates, amenities, schools, and more!).
5. Abundant nearby job opportunities
Most people want to live where there are plenty of jobs – after all, they can’t pay their bills if they can’t find work!
So, if the area where your property is located has lots of job opportunities, you can feel pretty confident knowing that there will be no shortage of tenants wanting to live there (provided the property meets other criteria for a good property, of course).
If a big new company is moving into the area, you might want to consider purchasing a property nearby. Chances are, most of their employees will be looking to move into that area too, and you can cash in on their need to live close to their workplace.
6. Good rent rates
When purchasing a property, always consider the average rent in the area.
You’ll need to keep the amount of rent you charge somewhere near that average. If that rent amount won’t cover the amount you have to pay for the property (mortgage, taxes, insurance, property management expenses, etc.), then keep looking for a property that is more suited to your financial needs.
When you’re looking for a new property to purchase in Maryland, consider all of the factors listed here as well as your short-term and long-term financial goals.
You’ll find that Prince George’s County, as well as many other nearby counties, has lots of profitable properties to offer if you’re willing to put in the work to look for them.
And keep in mind that Bay Management Group can help you with property management tasks as needed. We handle maintenance, rent collection, tenant screening, and more so you can stop stressing over unwanted responsibilities and get the most out of your investment!
Interested in learning more about how we can help your rental property business? Contact us today.