Are you looking to buy an investment rental property in Modesto, CA? Well, that’s a great thing you can do to generate more profit and expand your existing real estate portfolio. However, purchasing an investment rental property without doing thorough market research may turn your investment into a money pit and obliterate your returns. Therefore, it is crucial to consider several factors to make your investment more lucrative and rewarding.
Here are the top qualities you should look for when considering a Modesto investment rental property.
1. A Good Neighborhood
The neighborhood in which you will purchase a property will determine the quality of tenants you attract. If you buy near universities and industrial areas, you are more likely to attract high-paying tenants and ensure a lower vacancy rate. Consider researching neighborhoods where you find a variety of restaurants, parks and shopping malls and determine the location accordingly. For instance, you can invest in some of the best neighborhoods like Coffee-Sylvan, East Modesto, Northeast Modesto, Northwest Modesto, and near the Airport to generate more profit.
2. Current Rental Prices
The second crucial quality to consider is the current rental prices in Modesto, CA. Approximately 44% of Modesto households are renter-occupied, and the average rent for an apartment in Modesto, CA, is around $1,660. However, the rental prices may vary based on several factors, such as size, locality, condition and property type. In Modesto, you can charge higher rents in Del Rio Country Club, Dutch Hollow, and some parts of the east side.
3. Existing & Potential Amenities
Modern amenities are another essential feature to consider while buying a rental home. It is one of the reasons why your potential tenants are likely to stay longer in your rental. How close is your home to restaurants, nightlife, shopping and parks? Is it convenient for interstate access? Grocery shopping? Think about these things.
A conveniently located property can attract a larger pool of tenants and allow you to set premium rent amounts. Tour the neighborhoods and check out the amenities other competitive rentals are offering. Also, consider additional perks while buying a home, like gyms, movie theaters, public transportation and restaurants that attract quality tenants.
4. Number and Quality of Schools
As a property owner, you might rent a unit to families with kids, students or couples considering starting a family. Therefore, it is crucial to check the quality of schools and education in the area where you purchase a property. If there are no good colleges and schools nearby, it can negatively affect the overall value of your property. You can buy a home near top institutes in Modesto, CA, including Turlock High School, Whitmore Charter High School, James C, Enochs High School and Central Valley High School.
5. Available Job Opportunities
Modesto has a healthy and growing job market than similarly sized metro areas in California and has the lowest unemployment rate of 5.5% till Nov 2022. Modesto area employment is highly concentrated in 10 of the 22 occupational groups, including material moving and transportation, healthcare support, educational instruction and library, making the city a good growth area. A strong employment rate can cause the housing market to go up depending on the types of businesses. If you choose an industrial area for your next investment, you can benefit by charging a little extra.
6. Susceptibility to Natural Disasters
Rental insurance is another cost you will have to subtract from your rental income, so you should know how much it will cost you. According to a study, people in Modesto, CA, are likely to experience increased risks from heat, drought, and fire. Additionally, 11,589 properties in Modesto have a 26% chance of being severely affected by flooding over the next 30 years. If you purchase a property in an area prone to flooding or earthquakes, the insurance cost might significantly cut your rental profit, causing negative cash flow.
7. Type Of Property
As a beginner, you might be confused about the types of property you should buy to make investment lucrative. While single-family homes are the best investment for beginners, condominiums require low maintenance as the condo association looks after external repairs. Also, condos tend to appreciate more slowly than single-family homes and garner low rent over time.
Make sure to conduct comprehensive market research to understand the demand for different property types. In Modesto, while the need for a single-family home has declined during economic downturns, the multi-family market in the area is booming significantly.
Besides all the above qualities, consider checking the local municipal planning department to learn more about new developments in the property’s location. Watch out for the developments that could cause competition or help your investment prosper. At New Bridge Management, we can work with you to make your rental investment as profitable as possible.
For more information, reach us at New Bridge Management.
