Making the decision to be a landlord is an exciting investment of time and money, especially as housing markets shift and the search for property magnifies. But in recent years, the ever-fluctuating markets have caused landlords to propose a variety of discounts, or gimmicks, to renters in order to secure clients. In New York City, for example, rents have stagnated in many areas like Brooklyn, where rents fell by 1% in June to $2,580 per month and 17.1% of properties were advertised with concessions.
But the issue for landlords across the board is that offering these discounts is not necessarily guaranteeing the sale, which is leading to the need to lower the cost of rent. For people looking to save money on property, this shift in rental costs will be certainly beneficial. On the other hand, landlords may lose money, making it all the more important to know what makes a great rental before taking the plunge.
If you are a looking for a rental property, a smart investor should always factor in all of the hypothetical costs of owning the property. Every property should be carefully assessed in terms of value, the amount of potential debt, the expected income, and other expenses, like renovation or upkeep. In order to recognize a great rental opportunity, here are three helpful considerations for landlords to keep in mind in today's shifting market:
Identify the market and submarket
If you are planning to manage the property, you will want to determine the most convenient investment option in your ideal location. First, it is crucial to identify the best market for potential renting opportunities. Then, identify the submarket, which is normally organized by neighborhood, where the rental property will make the most money. By determining a target area where renters are most likely to search for properties, landlords can help identify the type of rental that will make for the best investment.
Know the target renter
An important element to choosing a rental property is being aware of the target renter, or the person who is most likely to rent the space. This is crucial to the expenses that landlords will make on renovations and general home maintenance. For instance, if your target renter is a student in a college town, there is not as great a need to buy new appliances or repaint the interior.
Expect the unexpected
A final consideration for landlords looking for a potential rental property is to be aware of the worst-case scenario. The housing market, no matter the location, is known to fluctuate and recessions can occur at anytime. This means that landlords face the possibility of asking lower renting prices in order to attract clients. Being flexible and knowing exactly what you can afford if you face long-term vacancy is vital to owning a rental property. Landlords should always expect the unexpected and pay attention to the current rental climate when making investments.
By knowing the target market and renter, landlords can understand all of the details of potential properties before taking on a project that may lead to debt. This way, landlords can avoid the need to overcompensate with discounts and other concessions in order to secure renters.