When the time comes for you to secure your next rental property in Minnesota, it’s essential to keep in mind several factors that will help you find a suitable one. Finding the right rental property is not just about the location; it involves other critical aspects that ensure you have a comfortable living experience. So, to help you with your search, we’ve compiled a list of six things to consider when looking for a rental property in Minnesota:
Location
Location is a crucial factor when it comes to rental properties. Having a rental property in a great location can have a significant impact on your investment returns. Properties situated in desirable neighborhoods attract more potential tenants, which translates into lower vacancy rates and a more stable income stream. This means that you’ll have a more extensive pool of prospective tenants to choose from, and your property is more likely to be in demand, resulting in shorter vacancy periods.
One of the most important considerations for tenants when choosing a rental property is convenience. Properties located near high-performing school systems, grocery stores, shopping, entertainment, and other amenities can make tenants’ lives easier and more comfortable. Therefore, it’s a good idea to select a rental property that is close to these facilities, as it can increase the rental value of the property and the demand from potential tenants. Moreover, being a short drive from major highways or other significant attractions in the state can also be an added advantage, as it can attract a wider range of tenants.
It’s worth noting that while a rental property in a great location can be an excellent investment opportunity, it’s essential to factor in the suggested vacancy rate to your rental proforma. The suggested vacancy rate represents the expected time a rental property may be vacant between tenants, and it can vary depending on the location, the property’s condition, and the seasonality of the rental market. Accounting for the suggested vacancy rate ensures that you have a realistic projection of your potential rental income and avoids financial difficulties in case of extended vacancy periods.
In summary, owning a rental property in a great location can be a smart investment decision as it offers a wider pool of potential tenants, lower vacancy rates, and a more stable income stream. Selecting a rental property located near high-performing school systems, grocery stores, shopping, entertainment, and major attractions can attract tenants and increase the rental value of the property. Don’t forget to factor in the suggested vacancy rate to your rental proforma to ensure a sound financial investment.
Cash Flow & Growth Potential
As a landlord, it’s crucial to ensure that your rental property generates positive cash flow every month. This means that your rental income should be higher than your expenses, including mortgage payments, property taxes, insurance, maintenance, and repairs. A great rental property should have minimal expenses and minimal vacancy to maximize your returns. Regular maintenance and prompt repairs can help prevent larger and more costly repairs down the line and keep your rental property in top condition.
Another critical factor to consider is growth potential. A rental property with growth potential means that you can increase its value and rental income over time. If your property is located in a desirable area with high demand, you can justify raising the rent, especially when one tenant moves out, and you have another lined up to move in. However, it’s essential to keep an eye on the rental market rate and stay close to it to avoid overpricing your property and deterring potential tenants.
In summary, a great rental property generates positive cash flow every month with minimal expenses and minimal vacancy. To achieve this, landlords should ensure regular maintenance and prompt repairs to keep the property in top condition. Additionally, rental properties with growth potential can help increase their value and rental income over time. When considering rent increases, it’s essential to stay close to the rental market rate to avoid overpricing and deter potential tenants.
Property Condition
A great rental property will be in excellent condition. You may have to do some upgrades to the kitchen or bathrooms at the time of original investment, but overall it will be worth it. Tenants are willing to pay for quality. Also keep in mind, the better the condition of the property, the fewer repairs that will need to be made, and less likely the tenants will take it for granted. In general, they will work to keep the property in great shape for you!
Property Management
A great rental property takes great property management! You may want to consider hiring a property management company to turn your investment into a great rental property. For help selecting a great property manager in Minnesota or Minnesota, give Matt Buys Houses MN a call at 612-293-3532 to discuss your needs and intended level of involvement. You want to make sure you maintain the integrity of the structure and surrounding yards, all major appliances, and HVAC systems.
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 Minnesota. 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 Matt Buys Houses MN, 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 612-293-3532 to discuss these six things to look for in a Minnesota rental property.