5 Location Factors that a Rental Property Investor Should Consider

Location is so important in real estate investing.  In real estate, location is just as big a factor as the property itself.

Why opt to buy a residential rental property? Well, it all boils down to one word, profits. As inviting as the idea of buying a rental property may be, you may find yourself on the losing end if you do not make the right buy. Real estate is as tough as it is profitable. And what is even tough is not how to buy the right property but it is how to find the ideal property.

An ideal property is one that is most likely going to bring a return on your capital and reduce risk factors. Here are some things you have to consider when searching for the ideal rental property.

1. Location Determines Supply and Demand

You probably hear it all the time “location, location, location.”  It is a factor that is of utmost importance in real estate. Location will play a major role in determining the return on investment.  Why?  Because the location factors determine the demand.  The higher the demand, the more people are willing to pay to live there.

Ideal locations attract more tenants and it will also have an impact in the vacancy rate of your rental. For example, a rental close to an institution like a university will assure you of clients on a seasonal basis meaning your property will be vacant for holidays like summer.

2. Property Taxes

Property taxes are sure to affect your earnings. Rates vary and you need to know the rate of property taxes before you decide to buy a rental. This information is available in any municipality assessment office but you may also opt to consult people who reside in the particular area.

If you are planing to make money on your investment, make sure you actually know how your earnings will be affected to avoid a scenario where you make fewer profits than you would have wished.

3. Security

There is no way a crime ridden neighborhood will attract tenants. In fact, an area with a reputation of crime will most certainly affect your rent rates. The safer the area is, the more people are willing to pay to live there.

Find out about the crime rate in that location by going to the police for accurate crime statistics. It would also be a plus if you find an area with regular police presence, not because it is crime ridden but because police presence gives an assurance of security.

4. Employment Opportunities

Locations that have high employment prospects are likely to attract more people, meaning a high possibility of you getting regular tenants or long-term tenants. To find out how the rate at which a particular area is faring in terms of employment you can find information from government sources.

For example, in the US you can simply go to the Bureau of Labor Statistics. Also, look for new developments in business activities, for example, look at an area where a major company has announced plans for starting operations.

5. Convenience

How convenient will the rental be to your prospective customers? How close is it to schools, gyms, malls public transport and the likes. The importance of finding a location with the public amenities and private establishments that people deem as important is that you will be sure the area will atract people. More people means a constant flow of income from rent charged.


Just remember the importance of a good location.  The property itself might be in great shape, but if the location is off then it will be hard to find tenants.  Think about where people want to live.  Is it close to employment, entertainment, schools, and parks?  Looking at these factors will dramatically reduce your risk of vacancies and improve your return on investment.

Leave a Reply