Making Money from an Investment Condo: Features that will Give You a Good ROI
When choosing a condo as an investment property, the bottom line is the most important factor in your decision. Since your investment is only a success if you’re profitable, there are things to consider to ensure that your new property provides the kind of return you expect.
What Does ROI Mean?
Firstly, return on investment—or ROI—is an important calculation within your investment budget to determine whether your property will meet your goals and provide opportunities for growth. ROI is a simple calculation:
ROI = (gain from investment – cost of investment) / cost of investment
Your gain from investment is the amount of money you’ll earn on top of your original investment after the sale of the property. You’ll always want this to be a positive number, so you won’t want to sell the property if the value has declined to below what you paid for it.
To determine your gain from an investment before actually selling the property, calculate the future value of the property using historic appreciation rates by the number of years you intend to keep the property.
Your cost of investment includes all related expenses including closing costs, upgrades and maintenance and any other expenses related to your investment.
As mentioned, your ROI should always be a positive value. If it isn’t, it’s not really a good investment.
You need to consider all related expenses when working on your investment budget. With the purchase of a condo comes additional expenses you will need to include in your budget calculations. Things like monthly condo fees, annual property taxes, insurance, unexpected repairs and special assessments, and potential vacancies.
These additional expenses need to be covered in your rent amount, and they are on top of your existing mortgage payment for the condo. By calculating the monthly costs to own and maintain the condo, you’ll better understand the amount of rent you’ll need to charge to not only cover all related expenses but also make a profit.
People love their pets, and as renters, they can find it incredibly challenging to find a rental property that’s not only ideal for their lifestyle and needs but also allows them to keep their beloved furry friends. By offering this option, you’ll expand your potential tenant base and have more renters to choose from.
Be sure to review the building bylaws to learn whether the building allows pets, and if so where both inside and outside of the building are designated pet areas.
Access to Additional Storage
Everyday life comes with some things that simply aren’t easy to store in a condo. Items like bicycles and baby strollers, and even things like prized collections can be inconvenient to store inside a beautiful condo home. Offering additional storage options for tenants gives you an advantage over properties without these extra conveniences.
Renters today are looking for a place to live that they can be proud of, something that replicates a home they would buy themselves. Modern finishes such as stainless-steel appliances, granite countertops, tile flooring and thoughtfully designed floor plans are sure to attract the type of tenant that will stay for the long term.
And of course, the longer a great tenant stays the fewer expenses you incur finding new renters!
Watch For Walkability
Many renters seek a place to live that’s near the amenities they need, such as proximity to work, green spaces, schools, restaurants, nightlife, and shopping. The higher the walkability score on your investment property, the more likely you are to find a quality tenant that loves where they live.
Tenants want to feel like their living space is being taken care of. You can command higher rents from tenants who feel their condo is well maintained and worth the money they’re spending each month.
Be sure to invest in a condo building that is promptly and properly maintained and stay on top of maintenance and repairs within your own unit. By ensuring your tenant’s home is in top condition, you can continue to expect a reasonable rental amount without incident.
Smart Home Features
Home automation is the way of the future, and the future is now. By offering special smart home features such as home security, automated climate control, and smart home lighting, you can attract tenants that appreciate these modern conveniences and are likely willing to pay a bit extra in rent to have them.
These features are just a handful of ideas to attract better quality, longer-term tenants for your condo investment. With better tenants, your investment will be more stable and generate growth for your portfolio in a shorter amount of time, providing a better return on your investment.