There are so many methods in which a person can make money when it comes to real estate investing. Some of them have more risks than others. Automatically, those that carry the biggest risks are frequently the real estate investment techniques that have the highest potential profit but slow and steady, in many scenarios, wins the game. Flipping houses has been in the news more often as so many riches have been created doing this-more than a few have been lost in this method as well but those are not covered by the news nearly as frequent.
Dealing with investment rental property is not as fabulous and doesn’t give the almost fast profits that flipping houses can but it is also an excellent and valid strategy of real estate investing that will provide a constant profit over time if you plan properly. Investment rental properties are in demand today more than ever with so many folks going into foreclosure and losing the houses that they’ve worked hard to build for their loved ones. For this reason rental properties are a good thing to own at the moment, especially those that are family homes.
There are several reasons that people rent and while there are several risks involved when renting investment rental property, the risks are much lower compared to the risks involved in flipping or pre-construction investing options. There are several things you should think about when buying a property for the purpose of renting however in order to arrive a solid, wise, and long lasting decision for your real estate investment.
First, invest only in rental properties in locations that people want to live in. It may be true that you can buy property cheap in a few run down areas of town but it is doubtful that you will turn those properties into profitable rental units. It is great to pay some more for a more attractive address for renters. You will notice that your properties are rented oftentimes, which will give you more money in the long haul.
Second, give attention to the kinds of folks in the location and buy rentals accordingly. It is very possible to change big homes into several smaller apartment units (based on local zoning laws) that are ideal for college students. You do not want to implement this however in a location that is geared to family houses and won’t be good or tolerant of college students. Design the rentals based on the market you are attempting to rent out.
Third, avoid being greedy. The purpose of owning investment rental property is of course, to profit. At the same time, if you put a high price on your properties, you will notice that they sit vacant more often than not. Each month that your property is vacant is a month that you aren’t getting money on that property and a month that you are losing money at worst.
Fourth, learn about the market. Research the local market for purchasing real estate and renting real estate. This will aid with several things, not the least of which is the deciding factor whether or not any specific property will make a good rental unit. Another thing, it will aid you identify how much rent the units you are checking can provide month after month.
Lastly, when renting residential investment property you need to focus on the long-term goals instead of short-term goals. Property rental is a marathon race instead of a sprint with the biggest profits coming at the finish line. You will want to pay as small interest on the property as possible and pay the property off as rapidly as possible for you to realize the most profit potential and buy new properties. The true money when renting properties as a real estate investment isn’t in renting out one or two units but twenty or thirty units. The more rental residential investment property you have, the more money you will make from owning them.