Choosing between Two Cities for Your Next Rental Investment


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There comes a time when investors like you will be faced with tough choices. One of the most difficult choices will come down to location.  Here’s a prime example: in your search for your next real estate investment, you find two equally promising properties located in two different cities. You already have the information you need – both have clean titles, both require no rehabbing, and both are within your price range. The only difference they have is they’re located in two different cities. How do you choose? Here are the things you need to consider:

Know the overall demand for rental properties in both cities, including the current rent prices. Disregard the hype about rent prices and find out what the real figures are. Real estate professionals use a formula in determining this rental demand and prices, but the general rule is if both of your options offer the same ownership expenses, prioritize the one where the rent prices are higher. That way, your profits are also higher.

Check and compare the taxes in both cities. This is a no-brainer. If both properties are priced the same, the city that charges the higher taxes will most likely be a least favorable option. Then again, there are still more things you need to look at.

Determine the state of infrastructure. Sure the property looks great, and rent prices are high, but is it a convenient place for commuting tenants? You need to remember that many renters these days are previous homeowners who lost their homes to foreclosures. If they lost their homes, it’s highly possible that they’ve also lost their cars. You need a place where bus and coach services are easily accessible.

Consider the locals’ perceptions about each property’s neighborhood. Ask the locals instead of real estate agents. Agents who are desperate to sell properties from either location will not have the motivation to do extensive research or to provide you with the complete information. Talk to the locals and ask them: Are they happy? Is the place safe and livable? Is it somewhere many would consider staying or is it one that many would avoid? It’s useless to have an attractive property in a great investment city if the neighborhood has a bad reputation.

Take into account the availability of the property managers in both cities, including their professional fees. Although you’ll be able to find good property managers, the search process usually takes time. False starts are also possible so go for a property manager who allows cancellation of contract by either party without penalty, with a 60 days’ notice. A good and honest property manager will agree to this kind of setup and will not lock you into a one-year contract.

Choosing between equally promising rental properties in two different cities can be hard, but if you consider the different factors, you’ll be able to arrive at a smart decision. For more real estate investment tips, talk to us at Homevestorsfranchise.com. We know real estate investing so call us today or visit our website for more details.

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