Investing in Rental Units- Is it a good investment?

Investing is always a good thing to do, but investing wise is much better. The question that most ask is whether investing in rental development is a good investment.

The answer is that it depends. Below are some of the factors that have be considered in determining whether an investment in rental units (or any other real-estate development) is to be termed as good or bad:

  1. Location: This carries the whole weight with it. The cost of land, cost of building, easiness to attract tenants and rent payable by tenants will all be determined by location. Generally, a prime location tends to attract high net worth tenants but the cost of investments is also likely to be high.
  2. What the future brings: The future may introduce elements that either make the investment more valuable or less valuable. These can be man-made or natural. E.g. Development of a major infrastructural line may make the investments more valuable as the influx of people will lead to rise in rents and a fall in vacancy rate. On the same view, a natural catastrophe such as a disease outbreak or floods will make the investments less attractive to tenants.
  3. The Government: The government may pass rules affecting your investment e.g by putting a cap on the maximum rent that the tenants should pay.  The government may also introduce subsidies to encourage such investment hence lowering the investment cost.
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