Property next to railroad tracks, will it decrease my profits?

Question

I'm thinking about getting this property next to a railroad track. It is 2 beds 1 bath 800sqft one-story building. The average price for rent on such property in my area is around $750 per month. My question is: Am I going to be able to charge the average for my area or will I have to lower it because of the proximity to the railroad noise? if so how much would be less?

Oscar Rosales · Answer

I do understand your point Patricia, the properties around it are below the average price for this city even thou they have nice renovations. Thanks for your input.

Patricia Steiner · Answer

Let's start with a fact:  The noise level that comes with living near a rail station or tracks is 80 to 96 decibels; that's about as loud as a jet engine.  (Source: Home Light).  The financial impact on property values is well-documented; the hit is 15% to 25% of similar properties located in non-railroad communities. The rent will also be negatively impacted by the same margin but more disconcerting will be tenant quality and stability as these properties tend to be the "last choice" of prospective tenants.

My recommendation would be not to proceed with it. Hold out for a property that will give you top rent in the market and attract a stable/quality tenant.  It's that location, location, location thing...

Oscar Rosales · Answer

Thanks Taylor for your response!

Taylor Hudgins · Answer

Hi Oscar!

I would say it probably depends on how active the railroad is.  I don't think you'll have to lower the rent as long as you're ok with the idea that it may take a little longer to find a tenant who would be ok with the railroad there.  If you can't afford a long vacancy, you could lower it a bit below average market to attract a tenant faster.  As long as your numbers work, I'd say go for it!