# Factors that Determine a Successful Rental Property Investment
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-02-18
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Top Factors for Successful Rental Property Investment
Meta Description: Discover the crucial factors of location, house condition, proximity to amenities, and proximity to work/school that determine the success of your rental
URL: https://financedigest.com/factors-that-determine-a-successful-rental-property-investmenthtml

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Although real estate is a reliable investment, there are no guarantees, and sometimes people make bad investments. After all, considering how capital intensive the venture can be, you want to make your money back and more as soon as possible. While leaning on experts such as [Bay Property Management Group](https://www.baymgmtgroup.com/property-management-company-in-northern-virginia/) can help you maximize your profits, you stand to earn more with the correct initial investment.

So whether you’re a new investor looking to get into the game, or a seasoned player looking to expand your portfolio, you’re at the right place. This post reveals some of the most significant factors that determine a [successful rental property investment](https://www.financedigest.com/battling-uncertainty-is-the-key-to-property-investment-success.html "Battling uncertainty is the key to property investment success"). [Stick around till the end to find out what you should look for the next](https://www.financedigest.com/britains-next-sticks-to-outlook-after-quarterly-sales-rise.html "Britain’s Next sticks to outlook after quarterly sales rise") time you go scouting.

## **1.Location**

Location is arguably the most crucial factor in determining the success of your [rental property](https://www.financedigest.com/4-tips-for-landlords-to-increase-rental-property-profits.html "4 Tips for Landlords to Increase Rental Property Profits"). Since real estate is a physical asset, a lot of its [value comes from where it is and the surrounding properties](https://www.financedigest.com/how-a-garden-can-boost-your-property-value.html "How a garden can boost your property value"). You’ll find that in any city you visit, [real estate](https://www.financedigest.com/ab-property-marketing-appointed-to-represent-spanish-real-estate-law-specialists-fuster-associates.html "AB Property Marketing appointed to represent Spanish Real Estate Law specialists Fuster& Associates") in certain areas is more expensive than in others. This phenomenon is often due to several influences, including the walkability score, taxes, transportation, and utilities. Once you’ve discovered the best location for your property, you can start [scouting for the best ways to finance your investment](https://www.financedigest.com/how-to-buy-income-producing-real-estate-without-your-own-money-or-credit.html).

## **2.House Condition**

Another factor that determines the success of your rental [property is the initial house](https://www.financedigest.com/fractional-property-isnt-quite-as-safe-as-houses.html "Fractional property isn’t quite as safe as houses!") condition. Newer [homes tend to cost](https://www.financedigest.com/finance-teams-have-been-left-in-the-dark-on-the-real-cost-of-working-from-home.html "Finance teams have been left in the dark on the real cost of working from home") more on the market because they are low-maintenance in comparison to older ones. It’s one of the [reasons build-to-rent properties](https://www.financedigest.com/5-reasons-why-women-need-to-get-into-property-investing.html "5 Reasons why women need to get into property investing") are more expensive than your average rental that has already passed through several owners. That doesn’t mean every old house is a burst, but there’s a significantly higher tendency for things to go wrong. Not to mention that many of the fixtures and styling might be outdated and unattractive to the average tenant. Thus, it would help your [business greatly to invest](https://www.financedigest.com/investment-opportunities-for-businesses.html "Investment opportunities for businesses") in newer properties. After all, significant cosmetic changes and renovations could easily cost you more in the long run.

## **3.Proximity to Amenities**

Where’s the closest grocery store? Can we get takeout around here? Is there a gym in the neighborhood? These are some [common questions you might encounter from your prospective tenants during a home](https://www.financedigest.com/five-common-it-headaches-caused-by-long-term-working-from-home.html "Five common IT headaches caused by long-term working from home ") viewing, which is our next point. Residents value convenience, and what’s more convenient than having an excellent walkability score? Walkability score refers to a system of gauging the walking distance from a unit to social amenities such as parks, gyms, and restaurants. [Living far away from such amenities](https://www.financedigest.com/character-community-and-countryside-at-amen-corner-makes-for-ideal-living.html "Character, Community And Countryside At Amen Corner Makes For Ideal Living") can be annoying because it means long, tedious trips to the next neighborhood. Areas, where residents can quickly satisfy their average needs tend to be more expensive because they’re a lot more convenient. As a result, their landlords also make more profit.

## **4.Proximity to Work and School**

![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1297659529-1736816205381-compressed.jpg)

Like the point above, the easier it is for [people to satisfy their needs](https://www.financedigest.com/banks-need-to-digitise-financial-wellbeing-support-to-help-young-people-manage-through-this-recession.html "Banks need to digitise financial wellbeing support to help young people manage through this recession"), the more they are willing to pay. Since most people have to get up five [times a day either for work](https://www.financedigest.com/working-from-home-in-times-of-crisis.html "Working from home in times of crisis") or school, properties around such areas tend to be more expensive. For example, if your target audience is college students, you’re more likely to make a killing the closer you are to the university. Being close to their classes and other extracurricular [means waking up later and spending less time](https://www.financedigest.com/the-pandemic-means-that-its-time-to-double-down-on-our-commitment-wellbeing-and-employee-engagement.html "The pandemic means that it’s time to double down on our commitment wellbeing and employee engagement") commuting. The same logic applies to heavily [commercialized areas with offices](https://www.financedigest.com/maistro-appoints-new-chief-commercial-officer.html "Maistro appoints new Chief Commercial Officer") and elementary through high schools. Many tenants would choose to pay more and live a five-minute walk from their [place](https://www.financedigest.com/terraced-streets-most-neighbourly-places-to-live.html "Terraced streets most neighbourly places to live") of business over a twenty drive away even if the living conditions are identical.

## **5.Property Taxes**

Every municipality levies [property taxes on its homeowners depending on their rental type](https://www.financedigest.com/apartment-prices-rising-faster-than-any-other-property-type-new-data-reveals.html "Apartment prices rising faster than any other property type, new data reveals "). Since [landlords are often burdened with the responsibility of paying this tax](https://www.financedigest.com/buy-to-let-tax-changes-pushing-landlords-to-alternative-real-estate-investments.html "Buy-to-let tax changes pushing landlords to alternative real estate investments "), it would be in your best interest to inquire about such fees before making a purchase. A single-family unit in neighborhood A could curry up twice as much tax as the one in neighborhood B, even when they’re identical in other aspects. Thus, it would be best to look up the previous [tax information such as fees and projected](https://www.financedigest.com/equinor-evaluating-impact-of-british-windfall-tax-on-projects.html "Equinor evaluating impact of British windfall tax on projects") increment over time. With such information in mind, you can prepare a more accurate estimation of your expenses and make a better decision.

## **6.Limited liabilities**

When referring to liabilities, we mean things that might make a house seem less appealing. For instance, neighborhoods with a [higher crime rate](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom") tend to cost less to make up for their wary nature. Moreso, they tend to have a higher tenant turnover because [people are always looking to leave](https://www.financedigest.com/two-in-three-people-cant-leave-their-work-emails-alone-at-home.html "Two in three people can’t leave their work emails alone at home") and live somewhere safer. Another liability you might have to consider is whether the property is prone to disaster. Apart from residents feeling less inclined to move into a flood or hurricane zone, it could also drive up your premiums. That’s because insurance companies weigh the [risk of backing your property in determining your monthly payments](https://www.financedigest.com/risk-of-uk-balance-of-payments-crisis-under-truss-is-rising-deutsche-bank-warns.html "Risk of UK balance of payments crisis under Truss is rising, Deutsche Bank warns"). Considering the costs [associated with greater risks](https://www.financedigest.com/mcafee-highlights-emerging-cybersecurity-risks-associated-with-blockchain.html "McAfee Highlights Emerging Cybersecurity Risks Associated with Blockchain"), the less risk means more money for you.

## **Conclusion**

Any landlord looking to make the most out of their business should carefully consider these six factors that determine a successful rental [property investment](https://www.financedigest.com/brexit-no-obstacle-as-chinese-overseas-property-investment-doubles.html "Brexit no obstacle as Chinese overseas property investment doubles"). It might take some time and research to locate houses that meet most of these criteria, but if you stay committed, you’ll [reap the benefits](https://www.financedigest.com/can-finance-reap-the-benefits-of-the-cloud-without-compromise.html "Can finance reap the benefits of the cloud without compromise?").

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