Want a dependable rental income? Start with the location

[Eric Fernwood]

Most people start by finding a “deal.” “Deals” are usually low-cost properties.

Buying property based on price or initial return leaves a lot to chance. What do I mean by that?

Below is an illustration showing what you are also buying.

• Tenant pool demographics - Every property is only desirable to a narrow tenant pool segment. Not all tenant pool segments are the same. In Las Vegas, there are three major tenant pools. The annual vacancy cost for the three ranges between $400/Yr and $3,500/Yr. The same is likely true in any location.
• Economic Viability - The location determines the long-term characteristics of the rental income. If the location is in decline or stagnant, the rental income will not keep pace with inflation.
• Whether rents can keep up with inflation
• Maintenance Cost
• Rental restrictions
• Etc.

If you want a dependable rental income, do not leave anything to chance. Start with a good location (market), because your future depends on it. Then select a dependable tenant pool segment. Then after that is the property.

Let me know if you have a different opinion.