Identifying Good Investment Properties in Rockford, IL
You may have heard that an investment property is a license to print money. As Rockford realtors with long experience, we know that isn’t quite the case. But if you come into your investment property search with realistic expectations and armed with the right knowledge, they can be a great way to diversify your portfolio and your income, and can indeed be profitable. Investors throughout the Rockford area find Superior Realtors and Rental Properties a valued and trusted partner in sourcing Rockford rental properties, performing rental property management, and more.
The Fundamentals of Investment Properties
What should you know before you hang out a “For Rent” sign for the first time?
Know the Neighborhood
Every town and city has areas that are desirable, often cheek-by-jowl with areas that won’t command the same rents. Here, it’s important to consider how close a property is to certain amenities. Put yourself in your prospective tenant’s shoes, and ask the kinds of questions they’re asking as they compare rental properties before signing a lease.
- How does the rent compare to other properties in the area? What does it have that justifies the higher price (and what might it be missing that leads to a lower price)?
- Is it within walking distance of a laundromat or grocery store?
- Is it close to public transportation?
- Does it have a good walk score?
- What are the crime rates like?
- How are the schools in the area?
- What’s the local job market like? Will I be able to find something local, or will renting here mean a long commute?
- How far am I from interesting things to do, such as arts and culture, a nice bike path, or a park to take a walk?
Know the Locals
A university town is going to have a different tenant pool than an area that has attracted a large number of knowledge workers, or retirees. Each poses certain opportunities and challenges. If you’re renting to college students, for example, there’s a steady stream of tenants for nine to ten months of the year. But college towns, and areas with a lot of seasonal employment, also leave short-term vacancies that may be harder to fill. Talking to locals who rent can give you an idea of what’s good and bad about an area.
Run Your Numbers
It’s also worth remembering that the cost of a rental property is only one expense of many. Property taxes can vary widely, and as you’ve probably gathered, the desirable rental areas will often be the ones with higher property costs and property taxes. There’s also maintenance and upkeep (which can be better handled by a Rockford property management company), insurance, and mortgage prices, which tend to be higher for rental properties because lenders view them as higher-risk properties.
Determine Your Rent
Now that you understand the area and your expenses, you can begin to determine your rent. You may have a monthly income target, but that target also has to be weighed against your cost of doing business. When you were researching areas and properties at the beginning, you’ll recall that we advised you to understand the rents in your target area. If the rent you would need to charge would be significantly higher than other area rentals, then it’s time to go back to the drawing board. Conversely, if you realize you’ve got a hidden gem of a property and a low CODB, it may be possible to charge at or near market rate and see a great return on investment.
Protect Your Investment With Rockford Property Management
While we’re placing this at the end of the list, we could just as easily have put it in the beginning, or somewhere in the middle. Owning a rental property may mean temporary housing for someone else, but where they’re just passing through represents a significant investment for you. Protect it by taking care at each step in the process, and by not attempting to navigate the ethical, legal, and maintenance minefields that tend to surround rental properties. Getting help from an experienced property management company like Superior Realtors and Rental Properties
can ensure you’ve covered all the bases, and that your profits are maximized with minimal headaches. Get in touch today!