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What Makes A Good Real Estate Investment? Find Out Here

October 2, 2021

by Jerry Schmidt Investment Property

Just one of the ideal strategies to devote your funds is in genuine estate. Purchasing a house can be each a good expenditure and a fantastic area for you and your household to dwell. But when it comes time to come to a decision which house to buy, how do you know what is worth investing in?

Locale

This will give you a great deal of data about what style of people could want to invest in or rent your property, which in switch indicates how considerably money you are going to be capable to talk to for when promoting it. If there are not a lot of features within going for walks distance, then this could suggest that your home will not maintain as substantially price since renters and purchasers have less possibilities nearby.

If you’re thinking of moving to Asia, there’s a whole lot of real estate for sale in Singapore. Imagine about when deciding on your future home that it is close to community transportation hubs like searching centers or faculties since additional persons can obtain them easily. On the other hand, if there is not adequate parking outside for all people who are living there, then the added noise may drive away likely buyers, so feel about this diligently.

If you’re wanting at purchasing land relatively than a creating, keep these items in head as very well when determining what is worthy of investing in. For case in point, if there’s already an industrial zone nearby that does not call for any permits from the government right before construction starts, then this could signify that there will shortly be a lot of providers transferring into that location which would direct to raising demand for housing in the vicinity of them so feel about how substantially area close to your whole lot is remaining made use of now.

If you are closer to the city, then do some research on how a great deal it fees for people today to commute from your area.

Affliction

The condition of a home is an vital element in determining the investment. It needs to be good enough that you can resell it at a revenue without far too much function, but not so awesome that there is no room for improvement and escalating your revenue even additional. You also want to look at regardless of whether or not repairs would price far too a great deal cash in advance of determining on the invest in price.

For instance, if the roof has been absolutely replaced lately, you possibly won’t make as big of a return when offering due to the fact most folks want older residences with character over more recent households created from affordable resources. To boost benefit whilst however receiving a higher ROI (return-on-commit), appear for qualities that have exclusive functions, these as a exclusive floor approach or 1 that has been current more just lately than other people in the place.

Price Vary

The selling price assortment of a potential rental house is particularly important to look at. It’s likely to be extremely challenging for you to correctly handle and maintain your attributes if your profits does not address the expenditures that have to have to be paid each and every thirty day period. You want to make positive that when you take out a financial loan or glance at how much it will price tag for you to buy the property, this rate variety leaves room in scenario some thing goes wrong with routine maintenance fees.

We also have to choose into thought that if we approach on residing in these houses, they need to be priced right, so it does not have an impact on our own personalized finances. There wants to be sufficient home still left in excess of right after shelling out all of the regular costs and expenditures!

Investing in authentic estate has several alternatives connected to it – but make confident you know exactly how considerably income will go out just about every month simply because when points do come about with upkeep expenses, there need to normally be excess price savings just in circumstance!! If you’re hunting at acquiring a home that’s presently been renovated, then consider into thing to consider that the cost range of this residence could possibly be a very little higher than an typical one particular, but will assistance you help save income in the long run.

Dimension

When contemplating this, you should assume about how much house your tenants want in get for them not to experience cramped or crowded. Imagine about the measurement of each bed room and bathroom (for condominium buildings). Also, contemplate if there are any popular spots like lobbies in which individuals could collect together or sit down situated outside unique units that may well be incorporated in the property’s sq. footage as nicely.

For condos, it would also involve parking spaces offered on-website on the other hand, because they really don’t generally appear with garages these would not essentially count toward total dimension both way but will nevertheless have an effect on its worth no matter of what style of constructing it is just for the reason that extra parking will allow for far more tenants. This way they’ll both concur or disagree according to current market cost, which guarantees best effects from leasing out units…

Rental Demand from customers

The final element of a very good genuine estate financial investment is rental desire. A house with high amounts of lease demand will generally be a good asset for the investor to have, creating it less complicated to sell if they ever require/want to money out.

Rental demand arrives from the demographics bordering an region. If you’re common with a certain group and can see that there is possibly no or incredibly very little turnover, then it could be beneficial to appear into obtaining investment assets in this place because rental fees will continue to be dependable year-above-12 months.

This implies less work for the trader and far more dollars in their pocket! The reverse would be correct if there ended up high degrees of lease turnover – in which inhabitants are transferring each individual handful of a long time due to changes this sort of as relationship/divorce, new career opportunities or even just wanting a change of surroundings – which usually signifies that this is not the best place to obtain.

As these scenarios commonly indicate that renters are regularly looking at houses on MLS listings (which requires them to regularly fork out focus and/or indication contracts) as properly as promote their house for hire (e.g. Craigslist, on the net advertisements), this will translate into rental turnover charges which could trigger the home owner hassle in acquiring a suitable tenant quickly – resulting in owning to offer you much larger incentives such as cost-free to start with month’s rent or less costly month-to-month rents when compared to encompassing properties.

If you recognize that there are continuously new qualities being stated on a weekly basis, then this signifies renters are hoping difficult to find new homes and may be more most likely to renew their leases because of to the lack of choices (or small-top quality types) in the space.

We have talked about what is desired for a real estate investment with superior returns. These are the fundamentals of each thriving home. If you require much more data, just contact us these days, and we can discuss your solutions further more! We’d be satisfied to enable you uncover the great expense for you.

Estate agents accused of ‘slap in the face’ to renters with ads for investment properties that are not subject to rent cap limits

October 2, 2021

by Jerry Schmidt Investment Property

Estate agents have been accused of “slapping first-time consumers and renters in the face” with commercials encouraging home buyers to acquire residences because they are not capped beneath Rent Tension Zone (RPZ) legislation.

t arrives as landlords were alleged to have pushed up rents over and above boundaries imposed underneath restrictions.

Labour councillor for Limerick, Conor Sheehan, stated he was “dismayed” to see this sort of advertising and marketing practices whilst property-looking not long ago.

In 1 advert for a semi-detached household, an estate agent advertised the home as being “an perfect possibility for any first-time purchaser or for people who are searching for a probably valuable investment house with a robust produce not capped under RPZ legislation.”

Mr Sheehan, who has struggled to get on the assets ladder because of to rocketing residence charges, stated “the market is entirely in favour of buyers and landlords”.

“I was stunned but not stunned to see this. The point that the seller is encouraging a future consumer to acquire this home since it is exterior a RPZ, and hence they could demand exorbitant lease in exchange for a great return, is sickening.”

The Residential Tenancies Board (RTB), the State’s rental watchdog, reported there was “an unacceptable stage of non-compliance by landlords” just after its most recent rents index recorded rents increasing at premiums previous viewed ahead of the pandemic.

This is in spite of caps on rent raises currently being released in a few-quarters of the state. The RTB mentioned it was “concerning” that rents rose nationally by 7pc amongst April and June this calendar year.

Buyers snapping up households has been a big talking point in Ireland’s housing disaster and some estate agents have been focusing on their ads at individuals on the lookout to rent out qualities.

Another advertisement for a dwelling in a sought-right after residential spot reads: “Investors will be drawn to the chance to acquire a excellent asset with a likely lucrative rental earnings (currently uncapped beneath RPZ).”

Landlords bringing new rental houses to the marketplace or new tenancy agreements are exempt from laws on lease caps, so can effectively cost what they like.

Pat Davitt, main govt of the Institute of Expert Auctioneers and Valuers (Ipav), explained: “The Authorities is mindful of what’s heading on. It’s up to them to transform it. Estate agents publicize what is factual. It may possibly very well be contributing to the challenge [of investors buying family homes], but it is factual.”

Mr Davitt claimed that the RTB report released this week need to have a “health warning” as it does not differentiate involving homes in rent tension zones and those people that are exempt from the guidelines, irrespective of staying in these specified locations.

“It could be that these new rental attributes are driving rents greater, fairly than landlords flouting guidelines,” he stated.

The Federal government has now vowed to crackdown on rogue landlords just after rents surged by as much as 17laptop in some pieces of the nation.

The normal month to month rent nationwide now stands at €1,352 for each month, up seven for each cent year-on-12 months.

Renters in counties outdoors hire pressure zones – such as Longford and Leitrim – observed hikes of between 15.9computer and 17.3pc.

Padraig McGoldrick, interim director of the RTB, explained landlords who flout hire caps could be fined up to €15,000. The RTB is at this time investigating around 400 instances of non-compliance by landlords in relation to rent raises.

Housing charity Threshold said rent increases are pushing men and women into money issues.

One shopper of the charity had been dwelling in her rental dwelling for above 10 years, when her rent was hiked by €200, an increase of 20computer.

“She was by now battling to deal with the hire and often couldn’t set credit rating in her cellphone,” the charity reported. “Threshold was ready to assist her to dispute the hire boost, which was invalid, as she was living in a RPZ. The landlord issued a new hire assessment see in line with the RPZ policies.”

Investment Property Depreciation Explained | Canstar

October 2, 2021

by Jerry Schmidt Investment Property

Claiming depreciation can be one of the perks of owning an investment property. Here’s a 101 guide outlining how it works.

What is property depreciation?

Property depreciation is a legal tax deduction related to the wear and tear of your investment property. Put simply, you may be able to claim a tax deduction due to your property getting older with time.

How much can I claim in depreciation?

The amount you can claim will vary based on the specific property you have purchased and when it was built. The below figures are estimates based on the average of actual reports we’ve completed at Washington Brown.

If you buy a property built between the years 1987 and 2000, you may be able to claim roughly $4,000 in deductions a year, or close to $40,000 over the first 10 years.

If you buy a property built between the years 2000 and 2020, it’s likely you’ll be able to claim around $6,500 a year, or close to $65,000 over the first 10 years you own the property.

If you buy a brand new property, you may be entitled to claim approximately $16,000 in year one and close to $100,000 over the first 10 years.

Please note, however, that these figures are intended as a rule-of-thumb estimate rather than a definitive calculation of how much you’ll be able to claim in depreciation.

What items can I claim on?

As a general rule, approximately 98{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the construction cost of a new property can be claimed.

The only things you typically can’t claim on are landscaping (trees and grass grow – they don’t depreciate) and the demolition of the previous house.

A quantity surveyor can itemise all the parts of the building and create what’s called a “Rental Property Depreciation schedule”, which is a roadmap detailing how much you can claim as a tax deduction.

In this case, a tax loss can be a good thing because it reduces your overall tax payable.

A depreciation schedule is generally broken into two parts. The first part lists items that make up the structure of the building (bricks, concrete, roof etc.) and is known as the “Capital Works Allowance”.

The second part relates to items that wear and tear quicker, such as ovens, dishwashers, carpet and so on. These are known as “Plant & Equipment” and depreciate faster, because they won’t last as long.

How do I get a report and how much will it cost?

You can use the free Washington Brown Depreciation Calculator for an estimate of how much you may be able to claim. This will help you decide if getting a depreciation schedule may be a worthwhile exercise.

If you ascertain a depreciation schedule may reduce your tax, you can get a quote from a quantity surveyor (QS).

Not all quantity surveyors are the same and the price may vary, but generally speaking, you’ll pay between $400 to $715 for a quality report, with the main variance being whether a site inspection is required.

Will my property need to be inspected?

In 2017 the laws around depreciation changed dramatically. You can no longer claim depreciation on the previously used assets such as ovens or dishwashers. But, you can still claim the depreciation on the structure even if the property is 20 years old.

This means that sometimes you will need an inspection and sometimes you won’t.

A good quantity surveyor should assess your property on an individual basis and advise what the best plan for your property is to achieve the maximum depreciation at the minimum cost.

How long will it take to get a depreciation schedule prepared?

A depreciation report can take as little as three days, but sometimes up to a fortnight. Some factors that widen the gap include whether an inspection is needed and how easy it is to gain access to the property.

The location is also a factor in determining how long a depreciation schedule will take to complete. The more remote, generally speaking, the longer you may have to wait to get a report if your property requires an inspection.

When is the best time to get a depreciation schedule prepared?

The best time to get a report prepared is as soon after the settlement date as possible. A quantity surveyor will be able to inspect your property and see it in the closest condition to what you have purchased.

The depreciation schedule is generally valid for the life of the building but it is recommended you update the report if you do any renovations, repairs or need to replace internal items.

Here’s another tip – if convenient, organise a report in January when quantity surveying firms aren’t as busy, and you might be in a better position to negotiate on fees!

If I have forgotten to get a depreciation schedule, can I get one now and backdate it?

You can generally “backdate” a depreciation schedule by up to two years.

In essence, you will need to amend your tax returns and include the depreciation numbers that you have missed out on.

The depreciation report starts from the date you settled on the property – not from when you engage the quantity surveyor to prepare your depreciation schedule.

There are two key steps you must take to backdate depreciation properly:

Work with a quantity surveyor to create a full depreciation schedule for your property. They will inform you which items can be claimed. They will also discuss rental property depreciation rates with you.
Bring the depreciation schedule to your accountant. He or she should alter your tax returns so that you claim for all of the depreciation you’re entitled to.

Can I claim depreciation on old properties or is it just new ones?

The laws changed in 2017 and there is a big difference between claiming depreciation on new property compared to second-hand property.

If you acquired a second-hand residential property with a settlement date of 10 May 2017 or later, and it contains “previously used” depreciating assets, you will no longer be able to claim depreciation on those assets.

This refers to the Plant and Equipment portion of a depreciation schedule, including: ovens, dishwashers, lights, air-conditioners, televisions, carpets, lounge suites and blinds.

However, the Building Allowance, or claims on the structure of the building, has not changed at all. You will still need a depreciation schedule to calculate these deductions. This part of the schedule includes things like brickwork and concrete, so you’ll still be able to claim for depreciation on those aspects of your property.

Investors in brand-new properties can carry on claiming full depreciation on both the Plant and Equipment and Building Allowance.

These government changes were made because it was felt that property investors were over-claiming on second-hand depreciable items.

Can I claim on renovations?

The simple answer is yes – provided the items you acquire are brand new.

But if you go and buy a second-hand oven off Gumtree and have it installed, the item has been previously used and is no longer classified as depreciable. The key, again, is the term “previously used”.

If you renovate a house while living in it, then sell the property to an investor, the assets will be deemed to have been previously used and the new owner most likely won’t be able to claim depreciation on the Plant and Equipment.

Likewise, it is worth remembering that if you buy a property that’s been renovated by someone else and they lived in it for six months or a year prior to the sale, you generally can’t claim depreciation on the renovated appliances, carpets and furniture in the future, because they have now been previously used.

Cover image source: studiopure/Shutterstock.com

Tyron Hyde

About Tyron Hyde

Tyron Hyde is CEO of Washington Brown, a quantity surveyor organisation providing depreciation reports. He is also the author of Keep Claiming It! A Guide to Property Depreciation.

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Brokerage Reminder: Know the bottom line for investment properties

October 2, 2021

by Jerry Schmidt Investment Property

Buyers all want to know the similar point: “Is this assets heading to spend off?”

Any agent can present an authoritative and information-driven response applying two uncomplicated formulation:

the capitalization price (cap price) and
the web earnings multiplier (NIM).

Related posting:

Capitalization costs, spelled out

The cap charge is pure earnings — the amount of money of revenue remaining after all of the owner’s house costs are deducted from the gross cash flow generated by the home — expressed as a rate, or proportion. Most authentic estate investors will have a certain cap amount in head when searching for income-making property. This charge may perhaps be real looking or not, based on the current sector. [See RPI e-book Income Property Brokerage Chapter 4]&#13 &#13 &#13 &#13

To uncover a property’s cap fee, a buyer’s agent desires the following knowledge:

gross functioning profits (GOI) from the property (the hire amounts compensated by the building’s existing tenants and the scheduled lease amounts for vacant models)
home working expenses (taxes, routine maintenance and repairs expense, etc.) and
the buy selling price for the property.

Possessing attained the above facts, the agent calculates the net functioning profits (NOI) of the home by subtracting all assets expenses from the GOI:

GOI – working bills = NOI

Up coming, the agent establishes the cap fee by dividing the NOI by the invest in selling price:

NOI ÷ purchase selling price = cap amount

Once the agent has located the cap rate and introduced it to their customer, the customer can choose if it is superior enough and irrespective of whether the price of purchasing the assets will meeting their aims in possessing an earnings creating house. If the cap fee from the listing price would seem as well lower, the buyer’s agent can use the inverse of the cap amount system to locate a order cost much more constant with their buyer’s preferred cap price.

First, come across the NIM — this is the reciprocal of the cap level. Since a cap amount is expressed as a percentage, or fraction of 100, this can be accomplished by dividing 1 by the cap rate:

1 ÷ cap amount = NIM

Upcoming, come across the buyer’s wanted purchase rate by multiplying the NOI by the NIM:

NOI × NIM = buy value

What the consumer wishes the profit created from the assets to be and what can realistically be anticipated may be two various items. However, an agent who understands how to locate a property’s cap fee and NIM can reduce via a jungle of costs and variables to exhibit their buyer an expense property’s bottom line – in true numbers – in mere minutes.

Keep in mind: expertise is the crucial to achievements in today’s actual estate sector!

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Similar Video: A few Appraisal Methods: Income Approach

Simply click below for far more information and facts on this matter.

Other consumer issues

The cap level does not reflect each and every component an trader customer needs to contemplate when location the highest cost they will pay back. Software of a cap charge formula by itself does not account for:

required renovation and rehabilitation of the residence (which requires additional cash over and above the obtain value to get rid of the obsolescence)
the price tag of employing a assets manager and of other products and services necessary to operate the property (when not integrated as an running price)
a house loan with an interest rate exceeding the blended charge of inflation and genuine return on financial investment utilised to established the cap amount and
a ultimate/balloon payment in a home finance loan.

Therefore, a consumer getting an earnings-producing assets subject matter to an current home loan or funded by a new property finance loan demands to set the cap level higher than the interest amount on the mortgage to justify the risk of reduction. This distribute addresses objects these kinds of as restoration of the expenditure or reserves for alternative, and threats offered by adjustments in demographic (tenant) calls for.

Editor’s note — Any adjustable level property finance loan (ARM) or owing-day financing provides a especially troublesome danger of reduction because of exclusively to potential will increase in interest charges — which of class minimize house values.

Even further, the main resource of resources for the owner’s payment of a buy-help property finance loan is the property’s NOI. The NOI remaining following deducting the desire paid out on the home finance loan signifies the earnings attributable to the buyer’s cash equity financial commitment.

Thus, this remaining part of NOI requires to create a substantially higher share generate on the buyer’s leveraged equity expenditure (hard cash) to offset the threat of the buyer’s income remaining subordinate to house loan funding.

Pitfalls inherent in the residence: the principal group of hazard

As is the circumstance with any investment decision, acquiring earnings-manufacturing home contains an quantity of possibility that some or all the funds (hard cash and borrowed home loan funds) will be shed.

Hence, the prudent trader asks: how do you contain this hazard (called a risk high quality) in the cap level, in addition to the true level of return and the inflation amount?

There are two kinds of chance to take into account when deciding the risk high quality amount to be integrated in cap premiums:

challenges inherent in the residence (the key classification of possibility) and
hazards owing to human and other exterior activity (the secondary class of risk).

The principal class of danger considers the physical advancements on the residence, such as their deterioration and declining usefulness as a result of aging, identified as actual physical obsolescence.

Actual physical obsolescence is also labeled depreciation for tax accounting needs. Depreciation supplies for a return of capital (funds recovery) more than the remaining economic daily life of the advancements ahead of the land worth exceeds the value of the property’s money, identified as financial obsolescence.

Pitfalls because of to human and exterior exercise: the secondary classification of chance

The secondary category of risk contains the “human” and exterior influences on the property’s value. These hazards consist of:

the creditworthiness and stage of work range in recent tenants, an employer situation
the coming expiration of latest leases, which are ideally staggered, a management issue [See RPI Form 352-1]
opposition from nearby, identical properties (present and long term development), a sector problem
a background of crime fully commited on or close to the property, a safety problem [See RPI Form 321]
extended-term money and prosperity changes in the place bordering the assets, a demographic challenge and
variations in zoning, retrofitting, habitability and fire ordinances or restrictions, a political issue. [See RPI Form 185]

Want to understand more about this matter? Simply click an image underneath to down load the RPI book cited in this article.

Brokerage Reminder: Know the bottom line for investment properties

This short article was originally posted [August, 2012 of Know the bottom line for investment properties], and has been current.

10 Features To Look For With Investment Property

October 2, 2021

by Jerry Schmidt Investment Property

Buying a solid investment property can be a great way to improve your cash flow and long-term net worth. However, as with all real estate, not all investment properties end up being profitable.

Find Out: The Best and Worst Cities To Own Investment Property
Important: 10 Reasons To Think Twice Before Investing In Real Estate

A wide range of factors contribute to the overall soundness of a rental property, and it’s important to take them all into consideration before plunking down what is usually a sizable amount of cash. Here’s a look at some of the features you should be discussing with your real estate agent before making a move into investment property.

Last updated: Sept. 1, 2021

Inside Creative House / Getty Images/iStockphoto

HOA Fees

HOA fees can play a big role in whether or not an investment property can turn a profit. Some HOAs can run upwards of $500 or even $1,000 per month or more, which when combined with a mortgage and other expenses can make profitability doubtful. Of course, you also don’t want to buy an investment property with HOA fees so low that the property managers can’t keep the place maintained. A good HOA will keep a property attractive to prospective renters without unduly burdening its owners.

Read: 40 Cities That Could Be Poised For a Housing Crisis

Property Taxes

Your mortgage and HOA payments aren’t the only costs you’ll incur on a monthly basis when you buy an investment property. Property taxes can actually be quite a large portion of your monthly cost of owning an investment property. Even worse, property taxes typically go up every year. Fortunately, property taxes are typically deductible on your tax return. However, you’ll still have to budget for them every month.

Find Out: The 20 Hardest Places To Sell a Home

Ron and Patty Thomas / Getty Images/iStockphoto

Neighborhood

Real estate is often said to come down to “location, location, location,” and this is true for investment properties as well. The neighborhood your investment is in will play a big role in whether or not you can turn a profit. Think about it this way — when you’re on vacation, would you pay top dollar for a rental property in a run-down, dangerous neighborhood? Similarly, would you be willing to pay a premium for a rental in an upscale part of town? Even if you’re not planning on renting out your investment property, location will play a big role in how well your investment performs over time.

Find Out: 8 Insider Tips To Get Rich in Real Estate

Down Payment

The size of your down payment can play a big role in the return you get on your investment property. With a small down payment, you may have to pay a higher interest rate on your mortgage, and you may also be saddled with private mortgage insurance, or PMI. These are both costs that can eat into your profit margin. A higher down payment will also obviously require a greater cash outlay upfront, which could limit your flexibility to cover costs for things like maintenance or repairs.

See: 17 Dumb Home-Buying Mistakes That Hurt Your Wallet

Potential Rental Income

If you’re looking to rent out your investment property, probably the most important number to know is how much potential rental income you can earn. You can make a good estimate of your income potential by verifying what comparable rentals in the area charge and by talking to a good real estate agent. Bear in mind that short-term rentals can usually pull in higher rates than long-term rentals, but that income can often be highly seasonal.

Read: In Less Than a Decade, You Won’t Be Able To Afford a Home in These Cities

Improvements

Whenever you buy an investment property, you’ll have to budget for improvements. Some properties you’ll want to remodel right off the bat, while others you’ll have to maintain and improve to counter the effects of wear and tear over time. All of these costs will eat into your profit margin — although well-done renovations can actually improve both your property’s value and its potential for rental income.

See: 10 Hidden Costs of Buying a House

Insurance

You’re likely to need a variety of types of insurance if you’re buying an investment property. In addition to standard homeowner’s insurance, you’ll need rental insurance if you plan to generate income from your property. Depending on where the property is located, you might also need more specialized types of insurance, such as earthquake or flood insurance. Premiums in hazard-prone areas tend to be higher than those bearing no special risks, so be sure to investigate if those costs might apply to your new purchase before making it.

Read: Craziest Things That Kill Your Home’s Value

Rental Restrictions

A critical bit of information you need to know before you buy an investment property is whether or not there are any rental restrictions attached to it. For example, some condominium complexes forbid short-term rentals or even long-term rentals. If you’re looking to generate rental income from this type of property, you’re out of luck. Other properties might include provisions restricting pets, the number of guests or other limitations that might make your rental property less desirable.

See: 28 House-Flipping Rules You Should Never Break

Amenities

Just as you’re likely to pay more for a rental unit in a highly desirable neighborhood, most renters are willing to shell out more for properties with high-level amenities. These can range from a pool or hot tub to barbecue pits or green space. In the area around your immediate property, city-wide amenities, such as movie theaters, fitness centers and shopping centers, can both raise property values and attract renters. Without attractive amenities, you should expect to generate lower rental income and potentially even lower appreciation on your investment property.

On the Market: Renovations To Make — and Skip — Before Selling Your Home

Long-Term Development

The long-term development potential of the area around your investment property can be the key to generating significant profits. For example, if you’re buying in an underdeveloped area that’s about to get new schools, an airport and a resort development, your property value is likely to skyrocket. Of course, the opposite is also true — overdevelopment of an area with a flood of new rental properties is likely to sap demand for your investment. Talk to local area leaders and real estate agents to get a handle on what the area around your property is likely to look like five, 10 or even 20 years down the road if you’re looking to generate long-term profits.

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This article originally appeared on GOBankingRates.com: 10 Features To Look For With Investment Property