7 Tips to Spot Homes with Investor Potential

7 Tips to Spot Homes with Investor Potential


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Rutherford County Homes

If you’ve ever toyed with the idea of becoming a landlord, now is a great time to take action.

The age at which consumers decide to buy their first home is creeping ever higher, which means that consumers are choosing to rent for longer. The market is booming. Still, you will need a little know-how to set yourself up for success as a landlord. Here are 9 tips to spot Rutherford County homes with investor potential:

Scout urban areas

The majority of renters are concentrated in happening areas with shopping, dining, and entertainment nearby. Buying a middle Tennessee home can be expensive in these areas (as compared to homes in the country), which means that people who want city style and convenience opt to rent. As a landlord, you will spend less time searching for tenants in urban areas and can charge higher rental rates.

Check the school district

It is becoming increasingly common for families with children to rent homes, and when parents choose a home to raise their children, you can be assured they will hunt out the best school district. Invest in a property in a good school district, and you will be putting cash in your pocket.

Check the job market

No one is a fan of a long morning commute, and renters will fork out more for a place near work. More importantly, a robust job market supports renters who can afford to fork out higher prices—and do so reliably, month after month.

Pick more bedrooms

Two houses of a similar size may rent for very different prices. One variable that accounts for price difference is the number of bedrooms. Extra bedrooms expand a property’s horizons and entice buyers with possibility. Many tenants begin looking for a new place because they decide they want to grow their family. Alternatively, multiple bedrooms can be used by a pack of roommates. You will be able to charge higher rent in a roommate situation than a family situation.

Opt for low-maintenance landscaping

A dream tenant loves to garden, mow the lawn, and generally keep up with the Joneses. But more often than not, tenants consider the fact that their landlord is responsible for landscaping to be part of the advantage of renting. Save yourself a lot of hassle, and choose a property with landscaping that will be easy to manage.

Research property restrictions

Some outward dream properties are bound up in restrictions enforced by homeowner’s associations or zoning laws. Before you invest in a property, make sure you understand the legal baggage that comes with it. At the very least, make sure you actually can rent the property. In some areas, renting is prohibited.

Crunch numbers

A sound investment has to generate positive cash flow. Otherwise, your investment will crumble, no matter how lovely your property looks from the street.

Use the 1% rule to verify that a property will give you a good long-term return. You should be able to expect to charge 1% of the property’s sale price in rent every month.

Use the 50% rule to make sure that a property will generate a good monthly profit. Your mortgage payment should be no more than 50% of the rental income.

Becoming a landlord is a savvy financial move, provided you’ve invested in a strong Rutherford County property. The exciting news is that today’s market can float a number of new types of property investment, as new tenant demographics flood the rental market. Combine tried-and-true methods of pegging investor potential and new rental market areas to find a steal and profit for years.

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