When you are ready to purchase your next Southwest Michigan rental, there are a few things to keep in mind when looking for a property. Here are six things to look for in a Southwest Michigan rental property:
Location
Having a rental property in a great location means you will have plenty of tenants to choose from. Your property will always be in demand, and you should experience low to no vacancy rates. To be safe, of course, you will still need to factor in the suggested vacancy rate to your rental proforma. Great rental properties are usually near high performing school systems, grocery stores, shopping, entertainment, and may also be a short drive from major highways or other large attractions in the state.
Cash Flow & Growth Potential
To be considered a great rental property, it should generate a positive cash flow each month while incurring minimal expenses and experiencing little to no vacancy. Additionally, if there is potential for growth, it further enhances the property’s appeal. A rental property situated in a prime location with high demand is an excellent investment, as you can justify increasing the rent whenever there is a turnover, and a new tenant is secured. It’s important to monitor the rental rates in the Southwest Michigan market and adjust your rates accordingly. Charging a higher rent than the market average may deter potential tenants, while a rent that is too low may result in you losing out on potential earnings. Therefore, it’s crucial to strike a balance and set a competitive rental rate that aligns with the local market trends.
Property Condition
A great rental property must be in excellent condition, and while some upgrades may be required at the time of purchase, the overall investment is likely to be worthwhile. Tenants are generally willing to pay a premium for a property that is of high quality, and it’s important to keep in mind that the better the condition of the property, the fewer repairs will be necessary, and tenants are less likely to take it for granted. When tenants move into a well-maintained property, they are more likely to respect it and work towards keeping it in great shape, reducing the chances of damage and costly repairs. Therefore, investing in a property that is in excellent condition is an essential step in creating a profitable and sustainable rental property.
Property Management
Effective property management is a critical component of transforming a rental property into a great investment. Engaging a professional property management company can be a wise decision to ensure that the property is well-maintained, and tenants are happy. In Southwest Michigan or MI, I Buy SW MI is a great resource to help you select an experienced and reliable property manager that fits your needs and level of involvement. It’s essential to ensure that the property management company you engage is committed to maintaining the integrity of the structure and surrounding yards, along with all major appliances and HVAC systems. A property manager can also take on responsibilities such as screening potential tenants, managing lease agreements, and dealing with maintenance issues, making it easier for you to focus on other aspects of your investment.
Property Value
A great rental property will be valued at more than you paid for it! In order for this to happen, you may have to purchase your rental as a distressed property and put some money into it. If it’s in the right location with the right demand, your property value should slowly rise and make for a great profit in the future! Just make sure you hang on to it for more than a year, the longer the better for reduced capital gain taxes. When this happens, it makes for a great exit strategy.
Market Trends
It is important to keep an eye on market trends for your rental property in Southwest Michigan. You want to make sure your rental is keeping up with the rental rates and property values. This will help your property make as much money as possible for a great rental property. This will also let you know when the best time to sell your investment is. If the market starts taking a downward turn, you want to make sure and sell your rental property while it will still make you a profit!
When you work with I Buy SW MI, we take the guesswork out of the buying process. We research our properties and make sure they will fit your investment portfolio. Give us a call today at (231) 392-3262 to discuss these six things to look for in a Southwest Michigan rental property.