Analyzing Future Development and Baltimore Rental Property ROIs

By Rentwell

Analyzing the future development of an area is critical for property investors because it may provide insight into how their rentals will perform. Instead of snatching up a new rental property that appears good on the surface, it often pays to do a deep dive into future developments (or a lack of development) on the horizon for an area. Doing so may prevent putting money into a financially losing investment. 

Maintaining a healthy return on investment (ROI) for rental properties is vital for real estate management success. Future plans for a neighborhood or area can significantly impact a property owner's ability to generate long-term income from rental properties. However, with the help of a property manageryou can determine the potential impacts of future developments. Read on to learn more about this critical aspect of finding and operating a rental property!

Why Future Development Is Relevant to Real Estate Investors

A successful rental property owner must always have their eye on the bottom line when selecting a property. Many factors go into choosing a good investment property, such as the neighborhood, the amenities, schools, crime rates, and more.

Aerial View Of Industrial Commerce Office Buildings

Not only is the current state of a neighborhood relevant, but the future of a neighborhood is pertinent, too. Investors can gain essential insights into how lucrative a potential investment will be by knowing the long-term plans in and around the location of a potential property. 

Pros and Cons of Future Developments

A new development in the neighborhood has its pros and cons, depending on the type of development. When conducting research, a real estate management advisor can provide more information about how new developments could affect your rental property returns. 

What are the Pros?

Some of the positive aspects of purchasing in a neighborhood with future development on the way include:

  • The potential for added value to your property and the area due to the types of planned homes
  • More jobs in the area
  • Indications of a thriving economy in the area
  • New local amenities for tenants
  • Area revitalization
  • Excellent signs of growth
  • Higher rental rates (and more income)

While city plans for new neighborhoods, retail, or other types of development can be reasonable indications that you're about to buy a property in a thriving area, not everything about new development is good for rental property owners. 

What are the Negatives? 

Not all new construction or future developments indicate a boost for your rental property. Therefore, before buying a new property, it's essential to keep your ROI goals in mind. 

Some types of future developments may negatively impact property value and your potential returns. These include:

  • Power plants
  • Funeral homes
  • Graveyards
  • Low-quality schools
  • Certain kinds of clubs
  • Shooting ranges

Some types of new development can bring crime to the area or be unattractive to tenants. These factors must be kept in mind when investors determine where they want to invest in a new rental property.  Also keep in mind that big, lengthy construction projects can make an area undesirable for renters. 

In addition, a lack of development altogether may indicate the area is stagnant and deteriorating. You may not be able to attract new renters to this type of neighborhood.

How Future Developments Affect Property Value

As you weigh the pros and cons, it's vital to have a Baltimore property management expert conduct a rental property analysis that factors in future development and how it could impact your ROI.

Chandler, Arizona Airport and the Loop 202 freeway with surrounding homes, retail, office and business development

In addition to the immediate impact future developments may have, property investors must look at the long-term implications on the property's value. Since you may want to sell the property in the future, it's essential to consider how new construction could increase or decrease a property's value over time. 

What if you already own properties in an area scheduled for new development? Are there any implications? For example, you may find that new condominiums are scheduled to go up in a neighborhood near your investment. This could potentially drive down the value of your property because of the added rental inventory and competition. In this type of situation, a property management company can help you navigate this challenge to optimize your returns!

How to Learn About Developments In Baltimore Neighborhoods

Now that you know the potential pros and cons of new developments, you can take the next step to research potential projects in the Baltimore area. 

Investment owners can find information about upcoming development projects by searching Baltimore's Department of Planning website. Once there, you can look at the neighborhood profiles, development maps, permits, and development regulations. In addition, the BNIA's Development Tracker will take you to an interactive map showing all proposed projects. 

Property managers familiar with the areas also have insights into future plans and the potential impact on your properties!

Baltimore Property Management Companies Help Maintain ROIs

Seeking professional assistance from a Baltimore property management team will give you insights into the area, its future, and how it can affect your investment. Whether it's working through potential development projects near your properties or analyzing estimated returns for a property you plan to buy, get in touch with Rentwell for expert insights! 

What do you need in a rental property that delivers an excellent return on investment? Find out when downloading our free resource, "The Biography of the Perfect Investment Property."

Topics: Baltimore Property Management Real Estate Management Property Manager