If you are looking to invest in a rental property or add more properties to your portfolio, there are several things to consider before making a purchase. Location, overall cost, and expected monthly return are just a few factors that affect whether a property is worth your investment. Owning rental property can be very rewarding if managed correctly, so it’s worth it to take your time selecting the right fit. 

How to Find Investment Properties

Before diving into investing, you will need to perform a detailed analysis and research the different variables that have an effect on your decision. Keep in mind these important aspects when looking for that perfect purchase. 

Choose a Safe Neighborhood

Location is key when deciding to invest in rental property. The safety of the neighborhood will determine the type of tenants you will attract as well as the amount of crime you will have to deal with. Not only will a property in a high-crime neighborhood increase insurance premiums; if renters are affected by the operations of drug dealers or other dangerous tenants who live on your property, they have a right to sue under the theory that the property is a threat to public safety. Illegal activity may also subject you to extra fines put forth by local or federal laws.  

There are several resources available that offer accurate crime statistics for neighborhoods in Florida, including crimegrade.org. 

Examine Rental Prices Around the Area

Your rental income will determine the success of your investment, so take a close look at the average rent in neighborhoods you’re considering. Apartments.com and Rentcafe.com will give you an idea of median rental costs, but you will want to examine specific properties similar to those in your price range to see what renters are willing to pay per month. Remember, the rental income you collect each month will need to exceed your mortgage payment and any property management fees you will be paying. 

Pay Attention to Property Taxes

This will vary according to the location of the property, so you will need to pay close attention as it will directly affect your ROI. The listing you are interested in buying should include the previous year’s property taxes, but it’s also wise to calculate property taxes based on what you expect to spend. Miami-Dade’s Property Appraiser offers an explanation of how taxes are assessed in the county as well as a worksheet to determine property taxes on specific market values and location.

Consider the School District

The quality of schools around your property can greatly affect its value as well as what you can charge for rent. Parents looking to get their kids into desirable schools are willing to pay more, so take a look at some of the top ranked facilities and see what properties in the area are for sale. Both Miami-Dade and Broward School Districts are A-rated, and you can also look for specific schools in each district that are top ranked. 

Check Out the Local Job Market

Locations with growing employment opportunities will definitely attract more tenants. You can find out statistics for job availability in specific industries in the Miami area with the U.S. Bureau of Labor Statistics. Also consider browsing local news sources regarding large businesses or corporations that are moving to the area, as there will certainly be employees looking to rent either a short-term or long-term place. 

Look for Amenities and Entertainment

It’s always wise to invest in a rental property where people like to spend their time. Check out properties in neighborhoods with parks, restaurants, shops, public transportation, and other walkable or easily driveable amenities. Chances are if you drive around and think it would be nice to live there or even stay there for a week or two, so will many others. 

Research Future Developments

A lot of construction is often a sign of a growing community. Depending on the type of development going in, there will eventually be tenants who want to work there, go to school there, or retire there. Check with the municipal planning department for information on zoned developments in the area. Just make sure there aren’t other rental complexes that will end up being your direct competition. 

Beware of Many Vacancies

If you browse local listings and see a ton of properties available for rent—and that they are still empty after being shared on social media multiple times—consider it a sign. You don’t want to invest in rental property where no one wants to live. 

Invest in Rental Property That Fits Your Portfolio

Besides considering how to find investment properties, you will need to decide what type of property you want to own.

• A single-family home is a house in which only one family lives. 
• Duplexes and triplexes are single buildings featuring multiple spaces that have separate entrances.  
• Apartment buildings have multiple units, with each unit housing a separate family that pays rent. Apartments complexes can range from small (up to 100 units), to medium (up to 200 units) to large (up to 400 units).   
• A condominium is a building divided into several units that are each separately owned. You can purchase one unit and rent it out as a vacation rental or long-term lease.  
• Townhomes are multi-floor homes that share one to two walls with adjacent properties but have their own entrances. 

Each type of rental property comes with pros and cons. For instance, purchasing a single-family home will be a smaller investment, but will also only collect a single rent payment. On the other hand, an apartment building can require a substantial purchase price upfront, but can be lucrative when collecting payments from multiple tenants. You also have to consider how much time you are willing to dedicate for upkeep and maintenance on a property, as it could easily become a full time job. 

Tips and Recommendations for How to Buy Investment Properties

Here are some important tips and suggestions to consider when deciding what type of property you want to buy.

• Usually, the best investment property for beginners is a single-family house or a condominium. Single Family homes and condos tend to attract long term tenants such as families and couples.

• Condominiums have low maintenance costs due to the fact that the association takes care of external maintenance jobs and repairs. On the other hand, condos generate lower rental income and appreciate more slowly than single-family homes.
• Apartment complexes or multi-family buildings can be lucrative since you’ll be collecting multiple rent payments each month. However, it can be overwhelming to keep up with tenant complaints, repairs, and switching over units between tenants, so you may want to consider hiring a property management company.
• Even though you will depend on good projected cash flow from your rental income, the appreciation potential of your property is also really important for your property investment in the long run.

•  Keep in mind that a few repairs and renovations can increase the value of your property as well as attract tenants that are willing to pay higher rents.
• Make sure to check local rules and regulations about renting your property, as this may vary between different locations and property types.

Whether you’ve just decided to invest in a rental property or you’ve owned investment properties for years, it’s definitely worth your time to learn how partnering with MRM can help maximize your profits. We’ve managed rental properties in the Miami area for years and can offer expert advice on how to find the perfect purchase for your portfolio, and tell you how we can take the stress out of owning them. Contact us today.