Finding a Profitable Rental Property

Finding a Profitable Rental PropertyReal estate has long been known as one of your best investment options. It's a predictably appreciating asset with the opportunity to also be a source of monthly passive income if it is a rental property. If you want to own a profitable rental property, we have some tips to help you identify the right home for sale in St. George to help you reach your goals. 

Be Smart About Your Location

The profitability of a rental property often rides primarily on its location. Many tenants will prioritize the location of the home over most other features, especially if they are looking for a relatively short term lease or are looking for a vacation rental. 

Consider factors such as proximity to amenities, schools, parks, shopping centers, and employment opportunities. Properties located in desirable neighborhoods with low crime rates and good school districts tend to attract higher-quality tenants and command higher rental rates. You can also check out how many rental properties are located in the area, and find out what their prices are. 

Crunch the Numbers Realistically

One place many investors go wrong is underestimating their carrying costs or the upfront expenses to get the property ready. Being realistic with your budget is absolutely essential to knowing how profitable the home can be. 

Before you select a rental property perform a cash flow analysis to determine the financial feasibility of it. Calculate your expenses, including mortgage payments, property taxes, insurance, maintenance costs, property management fees, and vacancies. Compare your expenses to the expected rental income to determine the net cash flow and ensure that the property will generate positive cash flow, finding that projected rental income based on real comps in the area. 

Don't forget that emergency repairs and unexpected expenses are just part of being a rental property owner. Being financially prepared for these things is key to avoiding unnecessary stress and sticking with the investment for long term profitability. 

Assessing the Condition

There are a few different ways to go about buying a profitable rental property in St. George. You can look for something turn-key that is essentially ready for tenants tomorrow, or opt for a fixer upper with the potential to build some major sweat equity within a short period of time. 

There are, of course, pros and cons to either decision. In either case, do everything you can to be fully aware of the condition of the property. Just because something looks turn-key and is marketed that way doesn't mean it won't be in need of some major repair in the near future. A fixer upper may also be hiding far more damage beneath the surface than expected.

Pay careful attention to the home inspection report so that you have as much information as possible before making your decision or negotiating your purchase price. 

Advice from an Expert

Any investment is best made after consulting someone who has years of expertise. 

Bill Gassett of Maximum Real Estate Exposure, a real estate expert with three decades of experience, provided us with some terrific advice to share.

"One of the best ways of finding an outstanding rental property is to find a top local real estate agent and stick with them. You should be looking for someone who has a firm knowledge base about investing with rentals. You'll want someone who knows about ROI, rental rates, and vacancy levels.

Most of the time your best bet will be working with someone who has access to many listings. You can get lucky and purchase something that has not been listed for sale or at least know about it before others do. This knowledge can put you in prime position to act quickly, especially if you're able to do research prior to a purchase.

Investors can also do digging on their own. An auction can sometimes be a good avenue for finding a diamond in the rough. Just be sure you are comfortable with the process and understand all the risks, such as buying in as-is condition."

We are ready to be that realtor you need, with all the local insights required to help you be successful in your investment plans. Ready to find your St. George investment property? Contact us any time. 

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