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Characteristics Of A Good Investment Property

Finding the right investment property does not happen on accident. Investors are usually looking for a profitable investment property that will maximize their  ROI and provide a steady stream of passive income. As you search for the perfect investment property, keep an eye out for a property that has these five characteristics:

The Rental Home Is In A Desirable Location


When choosing an investment property, you’re committing to more than just the property. You are committing to the neighborhood. You can do all of the upgrades and renovations you want, but if the home is not in a great neighborhood, you’ll hard a hard time finding high-quality tenants to live there. The location of your investment property is arguably one of the most significant factors when it comes to the success of your investment. The location of the investment property is one of the few things that you can not change and is one of the things that matters the most. As you browse neighborhoods for investment properties, ask yourself:

  • Are the houses in this neighborhood well maintained?
  • Does the neighborhood feel safe?
  • How close is the neighborhood to local conveniences like grocery stores?
  • Are there strict rules for homeowners or an HOA to be aware of?
  • Is the area considered a strong rental market?

If you are planning on renting out this property, ask yourself if you would choose to live here based on the location. If not, you may not be looking in the right spot.

Local Crime Rate Is Low

The crime rate in a particular area directly impacts the value of the home. The higher the crime rate, the lower home values have to be to attract buyers. High crime is also a significant deterrent for buyers, making it harder to sell properties in these areas. An excellent investment property will be located in which people feel safe. Landlords often buy investment properties in Murrieta because of it’s low crime rate, and enlist the help of Murrieta property management companies to help them manage their investment properties.

Vacancies Are Low

A neighborhood with many vacancies should be a red flag when conducting an investment property search. If everyone is moving out of a particular area, there is a reason why. It could be that the specific area goes through a seasonal cycle, and if this is the case then investing here may turn out to be profitable, especially for short term or vacation rental investments. However, it could be that the neighborhood has seen better days and people aren’t happy with the area. If this is the case, you may need to continue your investment property search elsewhere.

The Rental Home’s Area Job Market Is Stable

A quick online search can help you determine the temperature of the local market in the area in which you are considering investing. A thriving job market and economy tend to draw in more people, which means there will be more people looking for rental properties and give you a larger pool of qualified tenants. A good investment property will be located in an area that people want to live and work.

There Is A Clear Understanding Of Future Development

Is the current state of the neighborhood projected to stay the same, or are there plans of bigger developments in the future? Development usually means economic growth, which is great for investment properties but could also mean competition for your property. Depending on the type of property and the type of tenants you are marketing to, future development could either be a significant incentive to move in or an obstacle causing them to reconsider

Average Rent Prices Are High

The whole purpose of investing in property is to generate income. If you plan on renting out your home, research the average rental prices in the area. A house is only worth what the renters are willing to pay for it, so even if your home has all of the bells and whistles, renters will not be willing to pay a higher rental price if they can find something similar down the street that is more affordable. If you can find an investment property located in an area where rents are high, and renters are paying it, you’ve found something worth holding onto.

Minimal Rental Maintenance Is Required

If your plan is to buy a property and get high-quality tenants in right away, you will want to look for a property that requires minimal maintenance. The less time and money you spend getting the property up to par, the sooner you can start earning money. Unless you are specifically looking for a fix and flip investment, look for an investment property that is as close to “move-in ready” as possible. Temecula property management companies, and other property managers in the southern California area, help landlords manage home maintenance on their investment properties to keep their home values high.

All throughout southern California you’ll find pockets of great investment opportunities and areas to avoid. As you search for the ideal investment property, it is important to keep your expectations realistic and be willing to compromise. The right investment property for you will help improve your current financial situation, not make things harder. An investment property doesn’t have to have all of these characteristics in order to turn a profit, but looking for these key fundamentals can make the decision process easier. Contact a Murrieta property management company (or a property management company in your area) for help finding investment properties that check all of the boxes!

Benefit National provides property management services in the Murrieta & Temecula area that improve real estate investors bottom line.