Ask anyone and they are more than likely to tell you that real estate investing is the best venture there is. In fact, owning a rental property could be the most lucrative investment of all time. If you hear otherwise, know that whoever told you so was likely not equipped with proper real estate knowledge or was speaking from a bad personal experience. So rather than listening to bad advice from failed real estate investors, listen to the best tips for buying rental properties from experts!
Without further ado, here are 6 of the best real estate investing tips:
Related: Successful Real Estate Investors: 9 Common Traits They Share
Tip #1. Buy a Rental Property Calculator
In real estate, you will only be able to make money when you get your hands on the best rental property there is. But you cannot do so until you have one of the best real estate investment tools– the rental property calculator.
With the rental property calculator, your search for the best investment properties for sale will be quick, easy, and accurate. Whatever your rental strategy, you’ll be able to perform investment property analysis and find the rate of return (cash on cash return and cap rate) as well as the potential rental income, cash flow, and occupancy rate.
You’ll also get real estate comps for any rental properties for sale that you choose to analyze with a rental property calculator. This makes the process of comparative market analysis much easier.
Essentially, with the rental property calculator, you’ll be able to analyze investment properties and quickly pinpoint the most profitable rental property in the location of your choice. That’s why you need to get your hands on one!
Tip #2. Turn to Lenders
Beginner real estate investors often think that it is better to buy a rental property with cash rather than take out a mortgage loan. However, this is not always the case when it comes to real estate investing. In fact, one of the best tips for buying rental properties is to leverage money for investment property financing.
If you have $100,000, why invest it in one rental property when you could use that money for five down payments and use loans to pay for the rest of their price? This way, you acquire five rental properties instead of one. Once you rent them out, you can have two properties completely paying off the mortgage while you enjoy the profit from the other three.
Beginners might think that having debt is a negative thing. But as long as your investment properties are covering the mortgage and still producing cash flow for you, it can make for a great strategy.
Related: Tips for Getting a Mortgage for an Investment Property
Once you pay off your mortgage, you’ll be able to enjoy 100% of the cash flow as well as the value of the appreciation for each investment property. And you’ll be looking at an investment property portfolio that has quickly grown to include multiple properties!
Tip #3. Explore Different Locations
The most significant part of real estate investing is the variety it provides. Not only do you get to choose the investment strategy, but you also get to explore different locations as well. For some, this variety may cause them to get stuck when deciding where to invest in real estate.
Let us help with one of our tips for buying rental properties: try long distance real estate investing. Why limit yourself to investing in properties near you? Sometimes the best investment properties are a few hundred miles away. But, if you are worried about going back and forth, professional property management is there for you.
Tip #4. Work with the Pros
A successful real estate investor knows that his/her work is not complete without a professional. Unless you’ve been in the industry for at least a few years, you need to work with the pros in the field.
One of the most useful tips for buying rental properties is to hire a real estate agent. An agent knows how to find rental property deals for the best returns.
So, to find the best real estate agent in your area, you’ve got to know what to look for in an agent. Things like credentials, investment history, experience as well as availability are essential for your investment property search. Furthermore, it is best to find a local agent who knows the area.
To help you find an agent near you, click here to get access to our Real Estate Agents Directory. This way, you can choose the location and view the agent’s profile before contacting them.
Tip #5. Explore the Different Types of Real Estate
Exploring the different types of real estate is one of the best tips for buying rental properties. You already know how diversification could play a significant role in your success. Therefore, buying different types of investment properties is beneficial to your real estate portfolio.
Our top suggestions are single-family homes and multi-family homes. While the first type is more affordable and appreciates quickly, the second provides multiple income streams from one rental property. As long as you choose the right real estate market, you won’t have a problem with the rest.
Other types of investment properties include apartment rentals, studio apartments, and commercial real estate. Apartments and studios are perfect for city locations as well as university locations, and typically there is always a high rental demand in these areas. On the other hand, commercial real estate is very lucrative since it rents for higher prices.
Related: 5 Tips on Researching Investment Properties
Tip #6. Buy Below Market Value
Providing tips for buying rental properties for an affordable price is our specialty. Make sure to always look for below market value properties before getting into the rest. Use Mashvisor’s search tools to look for foreclosed properties, ask a local bank, or even see if there are any short-sale deals around you.
Related: How to Buy Investment Properties: Short Sale vs. Foreclosure
These investment properties are usually in a distressed condition. So all you’ve got to do is renovate the property and rent it out. Do your due diligence beforehand and make sure that the rent will cover the renovation costs as well as the mortgage.
Need more tips for buying rental properties? Visit our real estate investing blog to get expert tips on everything from financing to buying to managing investment properties.