- Look for properties in good locations with easy access to transportation, good schools, and amenities.
- Utilize multi-functional furniture pieces and built-in storage solutions to maximize space and storage.
- Invest in properties with updated and well-maintained amenities to save money on repairs.
- Research the local real estate market to determine if there is high demand for rental properties.
- Compare rental prices in the area to make sure your investment will be profitable.
In the world of real estate investing, it’s all too easy to focus on red flags and potential risks. While these are essential things to consider, it’s also critical to recognize the positive aspects of a potential property.
Knowing what the “green flags” are can help you make smart investment decisions and ensure a profitable venture. Whether you’re an entrepreneur with a growing portfolio or a young professional looking to dip your toes into the world of real estate, here are the green flags to look for in residential real estate investing.
A Good Location.
It’s no secret that location plays a massive role in the success of any real estate investment. A prime location with easy access to transportation, good schools, and amenities will always be in high demand from tenants.
Even if the property itself needs a bit of work, a great location can provide a solid foundation for a profitable investment. But if you’re lucky enough to find a beautiful house and lot combo that offers the perfect combination of affordability and a good location, take it! Good locations are always in demand, and you should jump at the chance to invest before someone else does.
Adequate Space and Storage.
When considering a potential investment property, evaluating the amount of space and storage available is essential. Tenants typically prefer larger units with plenty of storage, especially if they have a family or need to work from home.
A property with larger units and ample storage space will not only appeal to a broader range of tenants but will also allow you to charge higher rent prices. However, if the property doesn’t have much space or storage, don’t worry! There are plenty of things you can do to maximize what you have. Here are some examples:
Utilize multi-functional furniture pieces.
Multi-functional furniture pieces like a Murphy bed or fold-out sofa can give tenants the extra room they need without sacrificing too much space.
Incorporate built-in storage solutions.
Built-in storage solutions such as kitchen pantries and closets with shelving help to maximize existing space while also providing extra storage for tenants.
Take advantage of vertical space.
Vertical space is often overlooked, but it can make all the difference. Shelves and racks that hang from the wall or ceiling provide extra space for tenants to store their belongings without taking up any floor area.
Install loft beds.
Loft beds are a great way to increase the amount of usable living space in a unit. They’re especially useful in smaller units where floor area is limited.
By doing all that you can to maximize the space that your property has, you can make it more appealing to tenants and command higher rent prices.
Updated and Well-Maintained Amenities.
Another critical factor to consider is the condition of the property’s amenities, such as the plumbing, electrical, and heating/cooling systems. A property with updated and well-maintained amenities can save you money on costly repairs in the long run. Not only that, but tenants will be more likely to stay long-term and provide a consistent cash flow for your real estate investment.
A Growing or Stable Real Estate Market.
While it is impossible to completely eliminate the risk factor in real estate investing, choosing a property in a growing or stable real estate market is perhaps the closest thing to a sure thing. Research the local market to determine if there is a strong demand for rental properties in the area. If the demand is high and supply is low, you may have stumbled upon a great investment opportunity.
Competitive Rental Prices.
Lastly, consider the rental prices of similar properties in the area. If comparable properties are renting for significantly higher than what you plan on charging, it could be a sign that the area is in high demand. You could potentially raise rent prices as well. On the other hand, if you’re considering an investment in a place with low rents, it may be best to look elsewhere.
Real estate investing is a great way to build wealth and generate passive income. When looking for potential properties, it’s essential to consider the green flags, such as location, adequate space and storage options, updated amenities, market conditions, and competitive rental prices.
Considering all these factors before making an investment decision, you can ensure your property will be profitable in the long run. With careful research and due diligence on each prospective property, you can make smart investments that will pay off in both the short and long term!
