What Makes Residential Real Estate Render Higher Rental Return On Investment
Investing in real estate for rental purposes is a highly profitable business once you know where to invest and how to manage it effectively. Whether you are new to the real estate market or an experienced property investor who is looking for their next profitable investment, understanding how to yield higher rental returns is a necessary part of your investment. Without its proper understanding, you’ll struggle to distinguish between a good and a bad investment during your property searches.
In his blog post, we’ll delve deeper into some of the important criteria that need to be considered when investing in residential real estate for earning a higher rental return.
Starting Your Search
If you are looking to buy property in Pune for renting purposes, begin your search by first figuring out your preferences. Understand the type of property you want to invest in and your targeted group of tenants. Explore the various locations, the neighborhoods, amenities available, among others. You should also check out the different available options based on your needs and preferences. It is advisable to seek help from professional advisors who can assist you in finding the most suitable property to invest in.
The search for your preferred locations to invest in rental properties depends largely on whether you want to manage your property or hire professionals to do the same. If you intend to do it yourself, you would probably want to invest in a property that’s not very far from your place. However, if you hire professionals, proximity is not an issue.
Factors to Consider when Investing in Residential Real Estate
It is important to know the average rental prices of the areas when investing in residential real estate. The property you invest in should be capable of yielding enough rent to cover your mortgage payment, taxes, insurance, and other expenses. Also, explore the area well enough to determine if there is scope for future developments. It’ll help you prevent any losses you may have to face otherwise. Suppose, you can afford to buy a property in a locality today but taxes are expected to increase in the future suggesting an affordable property today may turn into bankruptcy in the future. Therefore, you must research about the area, its average rental prices, and profit yielding capacity to earn a higher rental return.
The neighborhood that you choose plays a significant role in determining the type of tenants that you would attract. It would also affect your vacancy rate. For instance, if you buy a property in areas having universities and colleges, you’ll mainly attract students who come to study in these institutions, which is a positive sign. However, on the contrary, you might struggle to fill vacancies every summer.
Localities with growing employment opportunities typically attract more tenants. If you find that an area has an increasing number of companies being set up, the place will be a hotspot for job seekers leading to an increased number of tenants. Besides, the job market will also affect the rental pricing. Depending on the type of business involved, the prices will go up or down.
While renting the property, your main concern might be the monthly cash flow. However, the overall value of your rental property depends on various factors. If you intend to deal with family-sized homes, consider the quality of schools available in the locality. Having good schools and other educational institutions will increase the value of your asset.
A developing area is always ideal to invest in. If several constructions are going on in a locality, the area probably has good growth potential in the future. You can acquire the information on developments or plans that have been already devised for the area from the municipal planning department. Consider the developments that could affect the price of surrounding properties both in positive and negative ways. In addition, watch out for new housing developments that could compete with your property.
Be aware of the area if it is prone to natural disasters like earthquakes and floods. As insurance is an expense that you need to cut from your rental income, so it is important to know how much it is going to cost you. If an area is highly prone to natural disasters, it might end up eating most of your rental income. Thus, proving it to be a poor investment.
- Begin your search by figuring out the type of property and group of tenants you want to target.
- Get a thorough understanding of the neighborhood you are intending to invest in.
- Check the vacancy rate – a high vacancy rate is always a good sign.
- Explore the amenities in the locality and know about their future developments.
- Find out the average rental rate in the area to determine if it’ll be a lucrative investment.
Pune is one of the fastest-growing cities in Maharashtra. With the growth of the IT/ITeS sector in the city, it has become a major hub for employment generation. Besides, the city also homes several educational institutes including schools and engineering colleges. All these factors contribute towards making this place ideal for residential investments for rental purposes.
Every locality in the city has its distinctive features and real estate to invest in. Explore the neighborhoods thoroughly to choose the most ideal rental property and extract maximum benefits out of it. When you find your ideal property and finally invest in it, take proper care of managing your property as that’ll help yield benefits in the long run.
We, at DigiArch Realtors, provide comprehensive guidance to help you find the most suitable residential property for rental purposes in Pune. We have access to several high-demand locations in Pune including Kharadi, Wagholi, Lohegaon, Hinjewadi, Wakad, Baner, Balewadi, Keshav Nagar, Kalyani Nagar, Viman Nagar, Ravet, Bavdhan, Kothrud, Dhanori, Hadapsar, Bibwewadi, Kondhwa, Aundh Pashan, Wadgaon Sheri, Undri, and NIBM Road. Moreover, we have tie-ups with 50+ builders. We provide you multiple options in every area to choose from and assist you in finding the right property that will yield maximum rental return. Contact us for further details.