Things to Look out for when Investing in Rental Properties

What is it that you need to look out for in order to find the best rental properties around you? Contrary to popular belief, the house is not the first thing you should be looking into. Hard to believe, but there are other important considerations we should see.

The first thing you should look out to, is the location. In order to find nice rental properties, you need to check out its surroundings. You have to see the location and then everything else related to the location.

When a person looks for a place to rent, they have a budget, and definitely, one of the reasons that define if they can pay, or not, a house, is the location. First of all, make sure to find a property that goes with your expectation as an owner.

Jobs around Rental Properties

What will be the very first thing you need to see in terms of location? Jobs. If you don’t have jobs around how would you be able to pay for rent? The first thing you need to check is if this location has any jobs and if it doesn’t have any jobs within this area, how close it is to the next job facility, the next available companies, anything else that will provide those families a source of income so that they can have enough money to pay you the rent. That’s an important one.

Then the second thing you need to look out for is public transportation because depending on the neighborhood that you are investing in there’s a slight chance that maybe there is a car in the family and therefore only one person gets to drive everyone around or maybe you have one or two cars, but what happens to everyone who needs to get in the area? What happens to those children who actually need to hop on a bus or maybe those workers who don’t have access to any cars and they need to go from point A and point B? That will depend on the area that you’re located.

If we talk about New York City, this point is actually extremely important because traffic is ridiculous and for the most part nobody drives to work. People will typically hop on the subway and try to get to work as soon as possible. Then the next thing you need to check out in terms of location will be the cost of living

How expensive is it to live there? Do you have to break the bank in order to afford your rent and then maybe eat on peanut butter and jelly sandwiches for the rest of the month or is it something that it’s fairly reasonable to buy because that’s also going to determine the pricing of the property that you decide to invest?

If the rent is higher then for the most part the expectation is that the cost of the house or the building that you’re planning to buy is actually a lot higher too. That’s when you need to make the determination whether it actually makes financial sense for you to buy it because you definitely do not want to be in a negative cash flow. 

Relation Between Rental Properties and  Demographics

Once you have this very clear then the next chunk of the equation is to figure out what the demographics are. By demographics, we mean everything that has to do with the people that are going to live there.


Are we talking about a place where they mostly have families with children? or are we talking about a neighborhood that mostly has young couples who don’t have any children yet? or maybe kids out of college who are actually doing the whole roommate situation thing and they are looking to save and rent. All that it’s going to be very important for you to consider because depending on that that’s when you’re going to decide the size of the housing.

If you have a family with children running around for the most part you’re going to have to have a yard, you’re going to need a driveway for their parents or the soccer moms to go and pick up their kids and keep coming back, and you’re going to need lots of bedrooms. For example, having a one-bedroom house will not be the ideal choice for a family with three children, for example. You have to have at least three bedrooms in the equation.

Rental Properties neighborhood

When looking for a new house, a lot of people just care about their possible neighbors

If you are renting in an area where it’s mostly young couples that is just two people, for the most part, there will be content with a studio apartment or maybe a one-bedroom or maybe pushing it a two-bedroom apartment because maybe they have a lot of guests that come over and visits, a lot of family from overseas and they would like to give them the ability to have a room or maybe they would like to use that second room as at home office. That’s definitely something that you need to consider.

Recreation Areas

Now, we talked about the size of the household. In addition to that, you need to consider what’s around that for recreation because, believe me, if you have children the last thing you want is to care about bars and clubs around the area because you want everything to be centered around your children. You care more about having a Chuck E. Cheese around or maybe having an outdoor spur or maybe having a health club facility nearby for your children to do some kind of sports so that way they could keep their minds occupied and out of trouble and stuff like that.

If you are somewhat out of college, you are in an area where there’s a young crowd, they could care less about Chuck E. Cheese. They want to have things to do on Friday night, they want happy hours, they want to go out and be able to meet with friends and just chit chat and hang out two, three or four o’clock in the morning. That’s going to be something that you need to factor in because you definitely do not want to invest in a house that is large enough but then all of a sudden you’re marketing it to a family with children in an area where there’s lots and lots of bars around. It’s not the ideal environment to raise a family. Let’s just put it that way.

Convenience Stores around Rental Properties

Then the next thing you need to check out is convenience. How close is it to the supermarket, to Walmart, to Target, to the mall, to the pharmacy? Those are things that you need to definitely look into because nobody wants to drive an hour for the closest pharmacy, nobody wants to have to drive 45 minutes or to get stuck in traffic. Everyone wants to be somewhat close enough in a reasonable distance depending on the neighborhood or the state where you’re investing.

Rental Properties

It is good for you as an investor if there are covenience stores around your new property


For example, in New York City, people can walk down the block and they’ll have three pharmacies within walking a couple of blocks. Having choices is important in a suburban area where you will probably not be able to just walk out but you could drive maybe 10 to 15 minutes to the closest pharmacy or to the closest Walmart, but driving 45 minutes or driving an hour that might be not the ideal scenario for most people.

School Districts

Since this point is about families and children the next thing you really need to consider is the school districts. You need to make sure the area has schools around because depending on the school that’s where the parents are going to move around. Every single parent out there wants the best education for their children. They’re going to base their moving decision based on the quality of the school.

If you have a poor school district chances are you are going to attract tenants who may or may not be able to pay or afford the type of rent premium that you’re asking for just because the school doesn’t really demand that type of premium. If your house is actually located in an area where there’s high competition for kids to actually get in, then you cut the money a little bit more for the rent just because parents want their best for their children.

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