Producing passive income is a great way to grow your money. In addition, one of the best ways to attain this is investing in rental properties. Here are some of the most crucial things you should consider that will boost the income potential of your future property:
1. Consider your budget
The rental market is a safer investment choice because it’s not very volatile compared to others. Identify how much money you’re willing to invest to help you find a property you can afford and what type of home it will be. Try not to go over your budget to to the top end as this won’t leave sufficient funds for any improvements or repairs required.
2. Will it generate income?
Find out if the property will be profitable. Good thing we can count on the widely used 1% rule for rental properties. According to the rule, your monthly revenue from tenants should be at least 1% of the property’s total worth or greater. To explain this further, a house that has a total value of $250,000 must be able to provide an income of $2,500 per month or higher. With this guideline, you can start your research if you can be able to charge for a rent that’s 1% of the property’s total price.
3. Additional Expenses
Don’t forget to include other expenses when coming up with your “1%” value for monthly rental property payments. These include property taxes, house insurance and renovation or maintenance expenses. Generally, smaller homes will incur smaller costs for maintenance and it’s the opposite for large homes. Estimate a budget for these factors and consider the size of the home you’ll be renting out. Be sure to check the mortgageability of the property also as that can affect its overall value.
After you get familiar with the three factors above, you can use them to identify the best location for your rental property. The location has a great effect on the quality of tenants you’ll be getting. The best tenants could pay more if your property is situated in a wonderful community with major establishments like schools, groceries & offices close by. With these key factors in close proximity to the area, your rental potential could grow tremendously.
5. Identify your potential tenants
For example, if your ideal tenants are vacation-goers, you should consider a holiday rental home located near the coastline areas. Whereas if you plan to have fixed renters like small families or solo-living young professionals, it’s best to situate your property in good quality busy areas or near major cities like Brisbane. There you can easily find rent-ready secondhand homes especially if you’re on a budget. Although if you want to avoid incurring additional expenses for repairs & restoration, you can build a new home the budget-friendly way with modular construction. Surely there are a lot of affordable relocatable homes Brisbane has to offer. This can help you find the right rental property.
6. Other Factors
Aside from the location, there are also a lot of factors you should cater to be able to attract good quality tenants. These include access to transportation, parking spaces, customising utilities and furniture for the home as well as the number of rooms in a home.
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