Investing in rental property is a big decision. Know the market and the renters in the community before you get started. If you’re wondering if southwest Missouri is a good place to invest, consider these factors.
Find the Right Market
The Bolivar-Stockton area provides a number of job opportunities with companies and organizations like Tracker Boats, CMH hospital, the Coca-Cola Bottling Company, and Southwest Baptist University. According to census data, 55% of people in southwest Missouri work white collar jobs. Therefore, southwest Missouri has the potential for reliable, employed tenants.
The average monthly rent in Missouri was $771 in 2016. This increased by 4.47% over the last three years and is trending in the same direction (Census ACS data). Buying property now is a good idea since monthly rent and home prices continue to rise.
The rental vacancy rate in Missouri was 6.81% in 2016 also according to Census ACS data. This shows that the majority of rental homes are occupied, and not many are available.
Find the Right Property
After you’ve established that it would be profitable to invest in rental property in a particular market or community, consider your objectives and risk.
- Objectives – What are your goals?
- Risk – How much risk are you comfortable taking on?
Start with determining your price range. Let’s say you have $150,000 to invest. You could buy three older homes in a lower income area for $50,000 each, or you could buy one newer home in a growing area of town for $150,000.
If you want the lowest risk, you might go with the newer home. This will attract a tenant that is willing to pay more and probably has a more stable, long-term job. There will be less hidden costs and maintenance, but you will also only have one property to generate income. This could be a problem if your rental property is vacant for an extended period of time.
If you are comfortable with more risk, you could purchase the three older homes. This would allow for a higher potential of financial return. There may be more maintenance and unexpected costs to deal with, but it is very likely that one or two of your properties will always be occupied generating revenue.
Looking for more help finding the right rental property? Let Missouri Home, Farm & Land Realty, LLC be your guide. We know this market like the back of our hand! Give us a call at 417-777-3300 or contact us on our website.