What Makes A Good Rental Property?
When you are shopping for rental property there are several things to be taken into consideration. First and most importantly is the return that you expect to get from your investment. Most inexperienced investors and agents simply look to whether the gross rent will cover the mortgage payment, however they're so much more to take into consideration, like property taxes, insurance, repairs and maintenance, etc. etc. etc.
When Bancroft & Associates evaluates a property for management we take all these hidden expenses into account. This gives us the true cost of ownership and reveals the net operating income. Whether you are going to manage the property yourself, or hire professional help, you need to calculate the cost of professional management into your analysis model. Without it your circumstances may change and you may not have an economically viable investment when you really need help.
Any type of property in any location can be a good rental property if you apply the appropriate financial model. Different locations offer different types of management challenges, as an example, University properties tend to have greater vacancies during the summer months as the students are away. Studio and one-bedroom apartments tend to have a greater transiency than other units with more bedrooms.
Properties that have more units are not necessarily better investments than those with fewer units, again if the appropriate financial model is applied. Typically, properties with more units don't have backyards and private spaces that allow privacy to the tenant. Our experience shows that the individual space afforded in most 2 to 4 unit properties, allowed the rentals to more closely mimic that of a single-family residence, which cuts down on turnover and vacancy.