Benson was not so familiar with Lagos State as he just moved down from the US. So, he had to rely on people’s not-so-professional advice on buying a house as a rental investment. His advisors were not professional real estate agents; they were just hustlers in search of their portion of the ‘abroad money’. When Benson finally purchased a home following their guide, he came to regret his decision. The area lacked any possibilities of ever being profitable. Benson didn’t realise this until he wanted to rent the apartments out.
Not all property has the potential of becoming profitable in the long run. Unfortunately, you may not see this, especially if you are inexperienced in real estate. Fortunately, taking your time to study the location can give you an insight into what to expect.
You should research the kind of property you are looking at before involving an agent. Why do this? You already have an idea of what and where you want, so there is no need to create confusion that may lead to buying something you may likely regret later. What then are the features of a profitable rental property?
Have a look around the neighbourhood to see if there are mini food markets, supermarkets, ATM galleries, restaurants, bars, and so on, which are likely to help you get renters faster. No one likes to have to go far before getting what they need. These facilities are a big plus to your property investment.
If constructions go on, it is a good sign that it will develop in no time. Watch out for developments that could stall the price of surrounding properties. Additional new housing with more modern facilities could also compete with your property. This means that you have to keep it moving.
The vacancy rate could be high or low, and that depends on the value such location extends to its inhabitants. High vacancy rates force landlords to lower rents to attract tenants. Low vacancy rates allow landlords to raise rents.
Locations with growing employment opportunities attract more tenants. Most times, it may cause house rent to go up. However, if the employment opportunities available are for low-income earners, it is likely to affect the amount you place on your property for rent.
No one wants to live next door to a hot spot of criminal activity (drug pushers, kidnappers, burglars, etc.). Check the rates of vandalism, and also for serious and petty crimes. Pay attention to the criminal activities and see if it’s on the rise or declining. You might want to check the frequency of police patrol in the area.
Consider the quality of the local schools if you are dealing with family-sized homes. This is very important to look out for. Parents hardly ever want to go through stress taking their kids to school very far from home, so, if there are no good schools nearby, it can affect the value of your investment.
The neighbourhood determines the kinds of tenants you attract. If you buy close to a higher institution of learning, you should expect that potential tenants will be dominated by students. This is not a bad idea. It’s even a great investment people look out for right now.
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