You started investing in real estate because of the attractive “salary” it promises. Now you’re the proud owner of a rental property or two. But are you making as much money as you had hoped?
How Much Do Real Estate Investors Make in the US Housing Market?
While it’s difficult to pin down the average real estate investor salary in the US housing market as it’s not a 9 to 5 job, most sources place the average annual earnings at above $100,000.
Keep in mind some sites include salary data of those working for a real estate investment company as well as the different types of real estate investors (house flippers, commercial and residential rental property investors, REIT investors, etc.).
Financial Wolves, which looked at those who make money in real estate by buying investment properties, selling them, or renting them out, broke down the average annual real estate investor salary based on experience:
- First-time real estate investor: $15,000 – $18,00
- Seasoned/professional real estate investor: $100,000 – $123,000
Looking at those salary averages compared to the number of years you’ve been in the real estate business, you may be thinking:
- I want to get started in real estate but I want to earn more than that
- I’m a beginner real estate investor and I want to earn more
- I’m an experienced real estate investor and I want to earn more
But, What About the Average Return on Investment?
How much money you make in real estate also depends on how much you invested to begin with. So it could be that your real estate investor salary is low but you’re enjoying a high return on investment.
The average annual return on investment in the US residential real estate market is 10.6%, according to Investopedia.
Still earning far below average as a rental property investor? Or just not earning enough? Investing in rental properties is the best way to invest in real estate. But if you feel like you’re doing everything right and you’re still not making much money or a high return, there are ways to boost your income.
10 Ways to Boost Your Real Estate Investor Salary
The following strategies will help you make more money from real estate investing.
#1. Make Sure You’re Investing in the Best Places to Invest in Real Estate
The salary of a real estate investor is tied to where he/she is investing in properties. Financial Wolves lists the Utah real estate market as the location where the real estate investor salary is the highest, followed by South Carolina and New Jersey. However, this data was gathered by taking the average of around 8-10 salaries. And because data for real estate investor salary is hard to come by, it’s best not to rush to Utah and buy 100 rental properties.
When trying to find the best place to buy a rental property, you want to find a location that promises the highest return on investment based on your budget. Unlike data for salaries, return on investment data is readily available thanks to Mashvisor. Check out this list of cities with the highest cap rate for 2020.
This might mean you have to turn to long-distance real estate investing. But if this means that you can make more on average, then it’s best to explore other housing markets.
Also, make sure that the neighborhoods you’re choosing for investing in rental properties are profitable. Not every neighborhood in a high return on investment city will perform well. Use Mashvisor’s Real Estate Heatmap which will help you identify top-performing neighborhoods based on:
- Listing Price
- Rental Income (Airbnb and Traditional)
- Cash on Cash Return (Airbnb and Traditional)
- Airbnb Occupancy Rate
#2. Charge the Right Amount
If you want to focus on boosting your real estate investor salary through your current rental property, this is also possible. The first step is to make sure you’re charging the right amount of rent.
If you’re charging too little, then of course you’re earning less than other local landlords in the area. But also take into consideration your rental occupancy rate. If other landlords struggle to get their places rented but you’re enjoying 100% occupancy for months on end, then the lower rental rate could be doing your business good.
If you’re charging too high and suffering from high vacancy rates compared to the local real estate market, then a change will have to be made.
To learn how to price your rental property correctly, read: How Much Should I Charge for Rent? A 2020 Guide.
#3. Upgrade Your Rental Property Investment
Another way to increase your rental income from the investment properties you currently own is to force real estate appreciation. Increasing the rental value of your property will allow you to charge more. But you have to do a little research. You don’t want to add a home gym only to find out local tenants are not really willing to pay much more for such a luxury. For example, Zillow reports that 69% of tenants say that having air conditioning in a rental home is of high importance. This is a small, affordable upgrade that could easily ensure you make more money with your rental property and boost your real estate investor salary.
#4. Focus on Resident Retention to Boost Occupancy Rates
Keeping tenants for the duration of the lease and getting them to renew can also help to boost your income. How? Any time that your rental property is vacant, you are losing potential rental income. At the same time, you are probably spending money on advertising to try and find tenants. All of this can bring down your annual real estate investor salary, especially if you find this is happening multiple times during the year.
While circumstances leading to vacancies aren’t always predictable, you can take a few steps to boost resident retention and rental occupancy rates. For example, having a good tenant screening system in place that targets financially stable, long-term renters can ensure your rental stays occupied. Here are a few other steps to take:
- Building a relationship with tenants can also encourage them to stay put.
- Keep up with regular maintenance of the rental property and attend to any concerns or complaints from your tenants within a reasonable timeframe.
- Conduct exit interviews. When a tenant decides to not renew a lease, ask them why. Is there anything you could have done better? Was there something more you could have offered? Also, try to find out where your tenants are going to. If it’s a competing local rental property, try to investigate on your own how that landlord stole your tenant.
#5. Buy Multiple Rental Properties
You can make a decent real estate investor salary with one rental property. The beginner real estate investor salary mentioned above is likely coming from the fact that the investors owned one rental property. But if you ever want to reach the earning level of a professional real estate investor, you need to plan to buy multiple rental properties. This is no easy feat. But I have already put together a guide for you on How to Buy Multiple Rental Properties in a Single Year. Be sure to check that out.
#6. Find and Buy High Return Properties for Sale
When you bought your first rental property, what kind of return did it promise? If it wasn’t very high, then it may be difficult to generate more without major upgrades or renovations. This is why it’s important to conduct an investment property search in a way that ensures you’ll find and buy high return properties for sale.
For this, you’ll need the right real estate investment tools:
A Rental Property Finder
Mashvisor’s Rental Property Finder is a property search tool for investors that uses AI and predictive analytics to pull up a list of investment properties for sale with the highest return on investment. You can search for both traditional and Airbnb rental properties using filters like:
- Location (up to 5 cities at once)
- Distance from Location
- Investment Property Type (single family homes, multi family homes, condo/coop, other)
- Rental Strategy
- Number of Bedrooms/Bathrooms
Once you set the investment property search filters, the Rental Property Finder will instantly return a list of the best investment properties for sale. This tool is great for finding income properties with a 20% return on investment or higher.
A Rental Property Calculator
Identifying high return investment properties from your initial search is only step #1 to boosting your real estate investor salary. Next, you need to conduct a rental property analysis based on your personal financing and costs. A rental property calculator is the fastest and easiest way to do this. Mashvisor’s Real Estate Investment Calculator will generate a complete, automated return on investment analysis for every listing on the platform. It will include:
- Rental Income (based on local rental comps)
- Rental Property Expense Estimates
- Cash Flow
- Cap Rate
- Cash on Cash Return
- Occupancy Rate
- Rental Strategy Comparison (Airbnb vs Traditional)
- Real Estate Comps
- Investment Payback Balance
And there is a mortgage calculator so you can set your down payment, interest rate, loan amount, and loan term to see your actual cash flow and cash on cash return. With this powerful real estate investment tool, you are sure to find the best investment property with a high return on investment in a matter of minutes.
#7. Invest in Multi Family Homes for Sale
A lot of real estate investors start their career with single family homes. And while single family homes are great investment properties, you can earn more from multi family homes. Larger apartment buildings may be out of your budget, but small multi family homes for sale typically won’t cost you much more than a single family home (depending on the size and the real estate market). Consider buying a duplex, triplex, or fourplex. You can double, triple, or quadruple your rental income.
#8. Invest in Airbnb Rental Property
Mashvisor’s real estate data reveals something interesting about the two rental strategies, Airbnb and traditional. In most real estate markets across the US, an Airbnb rental property can earn more on average than a traditional rental property. This is because you can charge more per night and your rental income can get a major boost during hot seasons.
Before you invest in Airbnb to increase your real estate investor salary, find out if it’s legal in your city. You’ll also want to learn how to become an Airbnb host as it’s much different than being a traditional landlord. And if this doesn’t interest you, consider hiring professional Airbnb property management.
#9. Buy Below Market Value
If you’re spending less on real estate investments that have the potential to generate a high return on investment, you can easily boost your real estate investor salary. Buying below market value is a great strategy for this. If you can identify investment properties for sale that are being sold below market value but that can be rented out at a competitive rate, then you’ll be set.
To make this work, I recommend you look for off market properties. You can also look into buying bank owned homes, short sale properties, and foreclosures. The best place to find and analyze the rental potential of such properties is the Mashvisor Property Marketplace.
#10. Supplement Your Income with Other Real Estate Investment Strategies
The last way to increase your real estate investor salary is to explore other investment strategies. If you’re making as much as you can from investing in rental properties, then consider investing in a REIT. Perhaps one of the below market value properties you found would make a killing if flipped rather than rented out. And if you manage to find a great source of these investment properties, you may be able to flip houses a few times a year. Consider buying rental property to rent out on Airbnb and another to rent to long-term tenants. Explore the different avenues for making money in real estate and don’t limit your earning potential to one investment strategy.
Start Making More Money
You can start making more money as a real estate. While not every strategy on this list will work for you and your business, look into each one, weigh the pros and cons, and you’ll be sure to find the income-boosting path in real estate you’ve been looking for.