We recently defined RV Ratio and how to use it to make sure your prospective rental property investment is sustainable from a cash flow perspective. Of course, RV isn’t the ONLY factor to consider. Here are a few others.
Another big consideration to insure the property makes sense the day you buy it is location. At Empowered Investor Network, we shoot for entry level type housing. Not the bottom of the market. There you can end up with low quality tenants and a constant headache from the problems they cause. Move up from the bottom a little and find a pseudo-yuppie neighborhood of nice quality but still fairly inexpensive.
Normally, properties like these will be in a suburban neighborhood that may not be fancy but should be appealing. Check around. Make sure the property is not near a landfill, jail, noisy airstrip or railroad tracks. Any sort of external influence like that could end up making it harder to rent. I mean, who wants to sit down to eat each evening to dinner plates rattling from the Flight 515’s regular descent path directly over your house to the airport?
How do you find out about quality of life issues if you’re an out of state investor and you can’t take a trip there personally? Ask questions, lots of them, of the local developer or agent. Are there schools and shopping centers nearby? For a fun and informative quest, take advantage of technology and use Google Maps or Google Earth to explore the area.
Above all, get your questions answered and feel good about the decision before pulling the trigger.
