Real estate is one of the least volatile ventures where you can earn consistent income when it comes to investments. However, your investment is only as successful as the market you invest in. Thus, it’s essential to know the right season, neighborhood, or house to throw your money at.
Property owners with an experienced property management team benefit from receiving expert guidance from seasoned professionals. Although, if you’re yet to hire a team or are curious about the specifics, you’re on the right page. Stick around because we’ll expose the top 5 characteristics of a strong rental market. We’ll also highlight the best rental neighborhoods in Washington DC using those metrics.
How to Evaluate Rental Markets
- Evaluate the Neighborhood
The best place to start your evsee is if it has valuable amenities tenants may look for. For instance, you’ll want to consider things like how commuter-friendly is the area? What are the jurisdiction’s school ratings, and what’s the walkability score?
- Calculate the Cost of the Property
There are different ways to calculate the cost of a property. One of the most popular ones is the cost per square footage. You have to divide the total cost by the living space you have access to. Other popular methods include capitalization rate and cash flow on investment.
- Compare Similar Properties
When you consider the strengths and weaknesses of a single neighborhood, that’s an assessment. If you want to complete your evaluation, you must compare it to the current Washington DC housing market. Identify comparable areas to know if you’ll have to pay above or below market price. Besides property types within the same geographical area, there are other factors to use in your comparison. For example, lot size, number of bedrooms, and amenities can help you objectively weigh each option.
Characteristics of a Strong Market
- High Real Estate Appreciation
Real estate is pretty good at staying one step ahead of inflation. However, some properties do it better. High real estate appreciation is one of the first signs to look out for in a strong market. Attractive neighborhoods tend to increase in value, as do the profits of their owners. Finding the right real estate agent can make identifying these golden egg investments easier.
- Strong Economy
The state of the economy closely correlates with the performance of its industries and vice versa. When Federal Bureau policies and loan terms are favorable, investors seek out mortgages. Consequently, that propels the development of other businesses like construction, marketing, and other rental services. Thus, it’s crucial to look out for locations with a booming economy.
- Nearby Amenities
Proximity to amenities makes life more convenient for tenants. As a result, many people are willing to pay more to live closer to work, school, restaurants, and supermarkets. Hence, there tends to be a housing cluster and higher rents around city centers. Areas with a fantastic walkability score are more attractive to prospective renters.
- Low Crime Rate
Safety is an essential priority for every tenant. Most people would not consider living in an unsafe rental, even if it has the most elegant furniture at the lowest rates. After all, no one wants to risk their lives or properties. Thus, it’s essential you check crime rates before buying a house. Besides, secure neighborhoods allow other businesses to thrive and promote access to amenities.
- High Demand for Rental Properties
Finally, it would be best to consider the demand for rental properties. Home-owned houses are more common in certain areas, so looking for a tenant where people are looking to buy could be a problem. On the other hand, tourist hotspots are a prime location to invest in vacation rentals. However, other markets with low occupancy rates can be as lucrative.
Best Rental Neighborhoods in Washington DC
- Navy Yard
Formerly a shipyard, the Navy Yard is now one of Washington DC’s most highly sought-after areas. Many homes have a great view, as the area lies right along the Anacostia River. It’s also home to Nationals Park and has plenty of thriving commercial and residential activities.
- Mount Vernon Square
Mount Vernon Square is at the heart of downtown and an ideal spot for tenants in the fast life. There are plenty of high-end restaurants, bars, and supermarkets for local needs. Additionally, it’s a popular tourist destination because of its proximity to historical sites like the Beaux-Arts building.
- Dupont Circle
Dupont Circle is famous amongst young professionals. It’s a cultural melting point featuring some of the city’s most exotic art and food. Its proximity to the Farmer’s market makes it ideal for fresh food lovers. There are also plenty of fun social activities in the neighborhood.
Learning the 5 characteristics of a strong rental market is one of the basics of investing. When you know how to identify such opportunities, you can make better investment decisions that reap more rewards. On the other hand, it can also help you steer clear of money pits with low yields.
While we hope our list of excellent rental neighborhoods in Washington DC is helpful, your research is still essential. You can use the metrics we outlined to evaluate the market yourself or hire an expert property management team.