Does The Local Rental Market Affect My Investment?

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When you begin deciding on an area you wish to invest in, again I urge you to do your research.  As a proactive investor, one of the first things I will look for in an area is the rental market.  Avoiding properties that are saturating the market can be a ticket for you to get your place rented fast.  Luckily for us, the internet provides us with a ton of information on this topic and the following are the top four things I look for to avoid market saturation:

  • What types of properties are for rent
  • Rental prices
  • If there is a drop in rental price
  • How long properties are listed for.

What do I mean by Saturation?

For example, if you see a multitude of condos for rent, you may want to be wary of investing in a condo.  Why?  You will have a lot of competition for tenants and your property may sit vacant longer than you would like.  This concept goes with any type of property, such as a townhouse or single family home.  You want to invest in property that is needed and wanted and not already saturating the rental market.

Paying attention to how long rentals are listed can provide you with important insight into what you may have to pay to hold the property.  If rentals are listed for an average of 45 days, you will have to take into account holding costs of the property until you find a tenant.  Often, new investors will overlook this and not factor it into the overall budget.

While doing your research you find that condos are listed for an average of 60 days and often experience rental price drops.  If this is the case, that should be a red flag to you as an investor.  That little bit of research can tell you that in that specific area, condos may not be a high priority property and that if you decide to invest in them then you could experience higher holding costs or tenant droughts.

Solitary Investing = Potential Cash Loss

Don’t be afraid to reach out.  Yes, I do a lot of the due diligence work myself, but I also reach out to local agents to find out about the rental market.  The internet can only tell you so much about an area.  Realtors are not only used for buying and selling but for finding rentals as well.  Local realtors, on the other hand, can give you first hand accounts about a specific area and property. They can provide you with insight into how vast the market is for tenants saving you time, energy and most importantly MONEY!

The key to avoiding market saturation- do your homework and be unique.  If you happen to invest in a property that has a lot of competition your goal should be uniqueness.  Make your property stand out from the rest so that it is wanted and you will start bringing in cash!

Want To Learn More About Finding Properties?

SEO-48Click here to access our free video tutorial on where and how to find properties. We'll walk you through various websites and places to find properties, what to look for in a deal and what to look for in potential rental markets.  Get started now.

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