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What Should Buyers Look for in an Investment Property?

Cassie McClenaghan • November 18, 2024

What Should Buyers Look for in an Investment Property?

Follow this simple step-by-step guide to assess a property’s financial potential and make smart investments.

Ever wondered if a property is worth buying as a rental? It’s not just about finding a cute house or apartment. If you want to build wealth through rentals, you need to think like an investor. Here’s my simple process to decide if a property makes sense.

Start with cash flow. The first thing I look at is cash flow. This means the money coming in versus the money going out. If your rental income is $2,000 a month, but you’re paying $1,500 for the mortgage and expenses, that leaves you $500 in profit.

Is $500 enough to fit your financial goals? Maybe it is. Maybe it isn’t. But if the property costs more than it makes, it might not be the right fit. Positive cash flow is key to building wealth.

Compare your return. Next, I look at the rate of return. This shows how much money your investment will make compared to other opportunities. If your rental property brings a 3% return but stocks could make 7%, does it still make sense to buy?

"A great property in the wrong location won’t get good tenants."

Sometimes, a lower return is okay if it fits your long-term goals. The important thing is to know your numbers and compare them.

Check out the area. A great property in the wrong location won’t get good tenants. Look at what’s nearby. Are there businesses, grocery stores, and gas stations? Tenants love convenience.

Think about medical access too. Many renters want to live close to hospitals or urgent care. It’s a growing trend, especially with an aging population.

Don’t forget safety and schools. Nobody wants to live in a high-crime area. Lower crime rates attract better tenants, higher rent, and fewer problems. Also, check the schools nearby. Good schools mean families want to rent. Universities bring students and jobs. Both are a win.

Buying a rental property can feel overwhelming. You want to make the right choice. If you’re unsure, I can help you. Just call or text me at 602-581-3586. I offer free advice on what properties might rent for. Just reach out. Let’s make your investment work for you.

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