An investment is a risk; there’s no guarantee of profit. Some investments are riskier than others. For better or worse, profits from your investment property are one of the more difficult ones to predict. While predicting the market is incredibly difficult, there are a few things you can do to manage better and predict profits from your investment property.
3 actions you can take to manage better and secure profits from your investment property
Research Your Neighborhood
Even if two neighborhoods are right next to each other, it’s important to know that each neighborhood has its own real estate market – its own values, its own turnover rates, its own desirability. If you’re looking to invest in property in your current neighborhood, you might be at a slight advantage for predicting the real estate market. At the very least, you should have at least general understanding of the market you’re looking to invest in.
Make sure you take the time to calculate rent prices, use neighborhood search tools, analyze property reports, visit online listing sites, and talk to a local real estate agent.
Know Your Property
Knowing your neighborhood is important, but knowing as much as you can about your investment property maybe even more so. Knowing as much as possible about your property makes it easier to calculate rent prices that will maximize your earning potential.
Rental properties in different neighborhoods will command different rent rates, even if the units are the same size. Take your amenities into consideration, along with property updates. The more amenities a property has and the more remodeled it is, the more you can charge for rent.
Estimate Potential Earnings
Finally, once you have as much information as possible about your property, you can start estimating your potential earnings. Calculate rent prices at current market rent and figure out how much your rental property would be able to bring you in a given month.
Don’t forget to subtract expenses, like maintenance and taxes. You’ll also want to account for times when your property may be vacant between tenants. Estimated earnings can also help you understand if updating the property is worth the cost.
Knowing just how much you can earn through your rental property can be complicated. These three steps can help you start. For more information on real estate investment; or to see what your rental may be worth with a rental rate calculator, contact True Property Management today – 866-957-6677.