Tips To Pick The Best Location For Your Rental Property Investment
Picking the best location for your rental property investment is one of the most important decisions. Even if the property looks nice and modern, it might not be a great option if there isn’t much rental demand in the area, transport links aren’t great, or there are very few facilities. Following the right rental property location tips can help you avoid poor investment decisions.
Instead of focusing on the property itself, try to identify why people would want to rent in the area. Employment opportunities, schools, transport links, facilities, safety, and development can all impact how much rental demand there is.
The tips below will help you identify the best area for your rental property investment. They will help you identify good investment opportunities and pick the best location to invest in that will help create a steady rental income.
Identify Rental Demand
Before you buy any rental property, it is important to know if people would actually want to live there. If there is high rental demand, then it will be easier to find good tenants.
You can look online for rental listings in the area. Try to compare the rental prices of similar properties. Find out how much they are being rented for per month, what size they are, what facilities it has, and how long they are on the market.
Ask yourself:
- Are there regular rental listings?
- Are properties getting any interest?
- Is there demand for apartments, family homes, or shared accommodation?
- Are rental prices steady or rising?
- Will the area attract working professionals, students, or families?
If the area is near a university, students may want to live there as they can get affordable accommodation. If the area is near to business centres, professionals who want to get to work quickly may be attracted. Knowing who your tenants may be will help you pick the right property. These are important rental property location tips to consider before making an investment.
Good Transport Links
Many people will look for a property that has good transport links. It makes it easier for tenants to get to work, school, shopping, and other necessary places.
Look for properties near:
- Bus stops and train stations
- Main roads and motorways
- Business areas
- Schools and universities
- Hospitals and shopping centres
If the property is near to public transport, people may be attracted if they don’t have a car. For example, if the property is within a short distance of public transport, people may be attracted. Properties next to busy motorways may not be as attractive to some people.
Good Facilities
Often, people will look at the facilities in an area. Having a convenient area will make life easier and make the property more attractive.
Look for areas with good facilities such as:
- Supermarkets
- Restaurants and cafes
- Parks
- Healthcare
- Schools and childcare centres
- Gyms and shopping centres
Families may look for areas with good schools, parks, and healthcare. Young professionals may look for areas that have good restaurants, gyms, and transport links. Think about what lifestyle your target tenants want. Choosing a good area will make your property more attractive.
Look Into Crime In The Area
Most people will want to live somewhere safe. You will want to ensure that they will feel safe to walk around, come back to in the evenings, and raise a family.
Research the area thoroughly. You can:
- Look up public crime data
- Walk around in the day/night
- Speak to locals and businesses
- Look at the amount of street lighting
- Look at the condition of properties
Overall, think about the feel of the area; having well-maintained streets, good facilities, and a busy community will make the area more attractive. Make sure you use reliable local data.
Look At Property Prices Vs. Rental Income
Just because an area is popular doesn’t mean you will make a profit. You need to look at the price of the property and how much rental income you can realistically expect.
Look up the selling price of properties and average rental prices in the area. Something you may want to look at is your gross rental yield.
Gross Rental Yield = (Annual Rental Income / Purchase Price) x 100
For example, if you bought a property for £150,000 and your rental income was £900 per month:
- Annual Rental Income: £10,800
- Purchase Price: £150,000
- Gross Rental Yield: 7.2%
This doesn’t take into account any maintenance costs, insurance, management fees, tax, or void periods. Look at a few different areas.
Future Development
Areas which are set to develop can be popular. If the area is developing improving transport links, employment, and facilities, then it will become more popular.
Look up any new developments such as:
- New transport links
- Business areas
- Shopping and entertainment
- Educational
- Healthcare
- Improvements to roads and infrastructure
However, this may not be guaranteed. Look into whether the project has been approved and if any work has begun.
Walk Around The Area
Whilst doing research online, it will help to go and look around the area. This will give you a better idea of the feel of the area.
Walk around the streets, look at the facilities near, and see how busy they get. Look for issues with traffic, noise, parking, property maintenance, and essential facilities.
Try to go during weekdays and weekends to get a better idea of whether the area will be suitable for your target tenants. Following these rental property location tips will help you understand the area before investing.
Final Thoughts
Choosing the right area for your investment requires you to think about rental demand, transport links, safety, facilities, and possible future development. Using these tips will help you make more informed investment decisions. By identifying the right area, you will have a property that is attractive to your target tenants.
Take your time to research different areas, consider rental income vs. property costs. By choosing a good area, you will make managing your rental property easier and help create a steady return. These rental property location tips can help you make a more confident and informed investment decision.
