Investing in income producing assets is one of the best ways of making a profit and eventually getting rich. However, there are many underwater rocks that the real estate investor should keep in mind when selecting investment properties. Consequently, to make sure that the real estate investor is on the right track, he/she should know how to find the best income producing assets. Curious to find out how to select the best income generating assets and succeed in real estate investing? Keep on reading!
#1 What Are Income Producing Assets?
Income producing assets are the investment properties that generate profits in a cyclic manner. Real estate investing properties can generate certain profits on an annual, monthly, weekly or even nightly basis. Moreover, depending on the rental strategy of the real estate properties, income producing assets can be either a passive or an active investment. Curious to learn more about income producing assets? Make sure to read “The Best Income Producing Assets in Real Estate Investing.”
#2 How to Find the Best Income Producing Assets: Get the Right Real Estate Investing Knowledge
It is a well-known fact that without the appropriate knowledge, it is not worth it to start buying an investment property. The reason for this is simple: you will not be able to select the best real estate investments. Consequently, the real estate investor may forget about making money in real estate with any investment properties he/she purchases.
So what is the right real estate investing knowledge every beginner real estate investor should get? First of all, he/she should learn the basics of real estate investing. Second of all, the real estate investor should establish a goal he/she is planning to reach when investing in real estate properties. Third of all, the real estate investor should start by buying an investment property and keep on learning during the process.
#3 How to Find the Best Income Producing Assets: Select the Best Types of Real Estate
The world of real estate investing is massive and the real estate investor has the opportunity to choose from different types of real estate. For example, there are multi-family homes, single family homes, commercial real estate properties, townhouses, and many more. Different investment properties generate certain cash flow. Therefore, in order for the real estate investor to find the best real estate investments with a positive cash flow, he/she should explore all the possible options. Interested to know all about the types of real estate available? Make sure to read “What Are the Best Types of Real Estate Properties for Investing?”
#4 How to Find the Best Income Producing Assets: Consider the Optimal Rental Strategy
When buying an investment property, the real estate investor should have already established a certain rental strategy for one of his/her rental properties. Why is this so important? Imagine, without a proper real estate market analysis, an investor establishes Airbnb rental properties in a calm and quiet area perfect for long term living. The real estate investor won’t’ be making money in real estate. This will result in owning a negative cash flow property. That is why it is important to make up your mind about the rental strategy before buying an investment property. This way you can search for the best location and property type regarding the chosen investment strategy.
Typically, when dealing with rental properties, the investor has two choices: to either start investing in long term income generating assets or in short term income producing assets. In both cases, your rental properties will generate rental income and rental expenses. However, the question is: “How much rental income and expense will be generated?”
With Airbnb rentals, the investor will be able to get a bigger rental income per night than with traditional rentals. However, rental expenses are also higher with Airbnb real estate properties. This is due to the fact that your rental income properties need to be well maintained after each guest. Moreover, to have high occupancy rate, a well-thought-out marketing strategy is a must-have.
#5 How to Find the Best Income Producing Assets: Select the Right Real Estate Market
Let’s review quickly where you’d be if you followed our guide. You have the knowledge about real estate investing and you know with which types of real estate you would like to deal with. Moreover, you have selected the optimal rental strategy based on your personal preferences. Thus, now it is the right time to choose the best location for your investment properties.
Choosing the right location and real estate properties is the key factor when planning on making money in real estate. So, in order to select the best income generating assets, the real estate investor should conduct both types of research: real estate market analysis and investment property analysis.
However, it is the 21st century and in order to be the best in the real estate investing world, you should use real estate investing tools. Yes, the real estate market analysis, as well as the investment property analysis, can be conducted with one investment tool! By the way, Mashvisor’s rental property calculator is the right tool you might be looking for.
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Real Estate Market Analysis
The golden rule in real estate investing is: “location, location, location.” It is true that the best real estate investments are located in the best neighborhoods across the US. This is why conducting real estate market analysis is a must. Typically, real estate market analysis consists of finding real estate comps. Why should you compare your potential investment property with real estate comps? First of all, this helps in estimating the property’s price. Second of all, such analysis helps in determining the potential rent the landlord may charge his/her tenants. Lastly, the real estate investor will be able to select the best neighborhood based on the appreciation rates. That plays a huge role when the time for selling the income producing assets comes.
Investment Property Analysis
In real estate investing, this is a process of analyzing a (hopefully) low risk investment to determine the feasibility for investing on the basis of certain values and real estate metrics. Such aspects are crucial when estimating the profitability of a particular investment property as well as locating the aspects that may affect the performance in the future.
#6 How to Find the Best Income Producing Assets: Hire a Real Estate Agent
This is the easy way- no struggle and pressure. You hire a professional who does all the “dirty” work for you and finds you the best income producing assets, based on your criteria. Sounds great, doesn’t it? Well, there is one downside of that plan. You need to pay for the agent’s services. The better the real estate agent is, the higher the costs. Yet, this is still one of the best options you can consider when planning on buying the best income generating assets. Want to learn the best ways to find an agent? Then read “The Best Ways to Find a Real Estate Agent.”
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.