Investing in a rental property is a huge decision. You want to find a property that gives you good returns on your investment and improves your financial security over the long-term, as it requires a substantial amount of time and money and cannot be reversed anytime soon.
Rental property investment also demands a different, more objective perspective since you would not be living there yourself.
All good rental investment properties have a few factors in common, which contribute towards increasing the ROI of the property and making it a profitable venture for the investor.
If you are planning to invest in rental property in Roanoke, here are a few parameters you should consider to know if your choice can be a good investment.
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Location in a Good Neighborhood
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The neighborhood you choose will impact the rental value of your asset. It will play a significant role in deciding the type of tenants your house attracts, the rental price you can charge, and the revenue that it can generate. For example, if you purchase a property near a school or university, students and families may dominate the tenants’ pool for your rental. Alternatively, if you choose a property in a commercial district, you might see an influx of tenants who are working professionals.
Tenants also prefer a safe, convenient, and enjoyable neighborhood for living. A rental house located in the heart of the city, or the suburbs, with access to all public amenities such as parks, restaurants, clubs, and schools will experience a significantly lower vacancy rate than homes located far from the city hub.
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Access to Great School Districts
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Accessibility to reputed public schools is often considered an important attribute in determining rental prices. If you buy a unit in a great school district or near a university, the market value of your rent will increase, which will benefit you, especially when selling the house.
It will also attract more tenants since families with children want their next home close to public schools and universities. These renters also tend to stay longer since it is not always possible for them to relocate often with school-age kids. Good school districts are also known for offering greater safety; another reason why these area are in more demand.
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Low Crime Rate
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A high crime rate is a threat to the safety of your tenants and your investment. If you purchase a property without checking the crime and vandalism rate in the area, there are fewer chances of getting and retaining tenants. No tenant will be comfortable if there are a lot of criminal activities in the area, such as smuggling, theft, or assaults.
The local police maintain a record of crime rates in the area. You can check the crime rate through the investigating organizations’ websites and even discuss it with your real estate agent before buying a house in a particular area. Some of the safest neighborhoods in Roanoke County are Brookfield Road, Medley, Bonsack, Bent Mountain, and Hollins.
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Growing Job Market
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Opportunities for employment always attract job seekers since people like to stay in a location that offers good career exposure. A property in an area with a thriving job market will help you attract more tenants and witness an increase in property rates due to rising employment opportunities.
For example, buying a house in a location that is likely to become an industrial hub in the near future is likely to increase the number of people that may relocate, giving rise to the need for rental homes.
In Roanoke, the job market has grown by 1.6% over the last year and is expected to grow by 30% in the upcoming years, creating a large pool of potential tenants.
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Plenty Of Amenities for Your Rental Property
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If you are planning to purchase a rental property, amenities will play a major role in determining the profitability of your investment. The common utilities that tenants look for are ample parking, security, fitness clubs, swimming pool, playground for children, community halls, and laundry facilities.
Along with public amenities, the utilities that you offer inside your rental property also influence the tenants’ perspective of the home. You can visit the properties in your area and check for the popular amenities that the landlords are providing and see which of these are offered in the property you are planning to purchase.
Offering plenty of amenities will also let you charge a high rent and increase the market value of your property. Search and gather data that can give you an idea about the locations where you can find the best combination of public and private amenities. If you have a list of your must-have and good-to-have amenities, you can contact a local real estate agent to identify properties that fit your requirements.
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Clear Plan for Future Development of the Neighborhood
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Future development plans in the property location have a major impact on the price of the rental properties. Inquire about development plans that have been zoned and will be implemented in the area before making investments.
For example, an upcoming construction plan can increase the real estate growth rate in the area. However, it can also increase the competition between rental properties. You can collect information about future development plans for the next five years from the Roanoke Planning & Building Commission and make investments accordingly.
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High Average Rent
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Landlords often rely on rental income to pay their monthly expenses such as a mortgage, insurance, maintenance, taxes, and other expenses. Therefore, it is important to charge a rent that can cover your expenses and give you rental profit.
Research the average rent charged in your chosen area and analyze the potential of the local rental market in the longer run. If you can charge high rent in your location, it can be wise to invest now, but if the taxes are likely to increase in the future, it can get difficult for you to manage your rental expenses.
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Low Rate of Existing Vacancies
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If you are looking for a long-term investment, you should consider the vacancy rate. If you invest in a location with low occupancy and less rental demand, you will not gain a steady cash flow. You should, therefore, invest in an area with a high occupancy rate and a high tenant demand.
Take a virtual tour through various locations and find the best place for a rental property investment with a lower vacancy rate.
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Impact of Extreme Weather Conditions
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If you are investing in an area prone to extreme weather conditions such as stormy wind, snowstorms, and hurricanes, your house will need to be insured. You will have to buy an insurance policy covering the damage caused by natural phenomena and unexpected weather conditions.
In Roanoke, inland flooding frequently occurs due to hurricanes and tropical storms. Unfortunately, homeowners’ insurance doesn’t cover the damage caused by flooding. However, you can buy a separate flood insurance policy to cover the flood-related damage. Check with your local insurance provider or go through the National Flood Insurance Program to get more information.
Rental investment in a location that doesn’t experience extreme weather conditions can reduce your insurance expenses and increase cash flow. However, if you want to invest in an area that may be prone to extreme weather conditions, learn about the insurance rates in your location, the response time, and the risk assessment of the property.
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Strong Growth Rate of Population
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An investor can look for population growth in the area before making a property deal. Fast population growth, especially due to migration, indicates a thriving job market and increased career opportunities. It also leads to a steady increase in rental demand. Cities have a high population growth rate as compared to suburban areas or towns.
The population growth rate in Roanoke has increased by 2.45% over the years. In 2020, the recorded population was 99,411, which makes Roanoke the 8th largest city in Virginia.
To conclude, real estate investment is a personal decision of investors. You may want to choose a property according to your primary location from where you can easily monitor your asset, or you might have some personal goals attached to it. Aligning your investment goals and personal choices profitably is not always easy.
Although the tips mentioned above can help you make the right investment decisions, professional Roanoke property managers can assist you better with determining if a property is a good investment.
Lawson Realty Group strives to help Roanoke investors make lucrative rental home investments and meet their real estate objectives. Our decades of experience in the Roanoke real estate market help us understand your precise requirements and accordingly suggest the most appropriate investment properties for your consideration. Contact us at Lawson Realty Group if you need any help in buying rental property in Roanoke.
