One of the most amazing features of real estate investing is the immense diversity which this business offers. There is a virtually unlimited number of real estate investment strategies and an endless array of rental properties with which you can deal: residential or commercial, single family homes or multi family properties, apartments or condos, traditional or Airbnb, etc. Another wonderful thing about real estate investing is that it gives investors the opportunity to become rich, very rich; not in the short term for sure, but definitely in the medium to long term. Then naturally comes the following real estate question: What’s the best way to become rich through investing in real estate? The answer is: buy and rent properties. What is buy and rent properties and why is it the best way to become rich through real estate investments? Keep reading to learn more about this real estate investment strategy and the benefits it gives to a real estate investor.
Related: Top Six Real Estate Investment Strategies
What is buy and rent properties?
Buy and rent properties is indeed exactly what it sounds like. No tricks here. This is a real estate investment strategy in which a real estate investor buys rental properties and rents them out to tenants. Obviously, the more and the better investment properties that you have, the more rent you will collect from them, the more rental income you will make, and ultimately – the faster you will become rich through real estate investing.
Now that you know what buy and rent properties is all about, let’s take a look at the many advantages that it gives to real estate investors:
What are the benefits of buy and rent properties?
Buy and rent properties offers numerous important advantages over other real estate investment strategies including:
1. Rental income
You are in the world of real estate investing to make money and become rich, right? And of course because of the exciting investment decisions that you get to make. And how do you make money by investing in real estate properties? By receiving monthly rental income. As long as you manage to buy a desirable income property in a good location and market it adequately in the local rental market, you should be able to rent out your investment properties to tenants to start making money from it as soon as possible. That’s how you make money from buy and rent properties in the short run.
2. Real estate appreciation
The buy and rent properties real estate strategy does not give you the opportunity to make money only in the short but also in the long term – through real estate appreciation. Whenever you decide you are ready to sell your investment property (in order to buy a larger and better rental property or to replace it with two income properties), you should be able to sell your rental property for more than what you bought it for. Real estate property prices go up over time because the land on which they are built is a very limited resource and because migration is causing shortage of homes in most major cities. So appreciation in the value of your investment property will let you make some serious money when you sell it.
3. Safe investment
There is no way to go around it – every investment comes with some dose of risk, including real estate investments. Still, buy and rent properties is as safe as investing can go. No matter what happens, you cannot lose everything when you own a rental property because you will always be left with the property which you can sell if things get really bad. Even if a disaster strikes and you lose your income property, insurance will get you back most of its value.
What is the downside of buy and rent properties?
Of course nothing is perfect in the world of real estate investing, and even the buy and rent investment strategy has some downsides to it. Let’s look at them:
1. Requiring initial capital
There are ways to invest in rental properties with little money, but eventually most of the time you need at least some initial capital – to buy your income property, fix it, insure it, and start marketing it. So, buy and fix properties requires some cash.
2. Having major expenses
No matter how well you run your investment properties business, you will need to spend significant amounts of money on it – for buying properties, repairing them, maintaining them, insuring them, paying property taxes, managing them, etc. So, be ready to put a major portion of the rental income back into the investment property to be able to keep making money from it.
3. Dealing with tenants
Maybe the most significant disadvantage of buy and rent properties compared to other real estate investment strategies is that you will have to be a landlord and deal with tenants. Some of them will be pleasant to work with, while others would be a real nightmare.
4. Taking time
To buy and rent properties takes time – performing real estate market research, real estate market analysis, and investment property analysis; repairing and maintaining the income properties; managing them; dealing with tenants; and many others. So, even if you do real estate investing as a part time job, be sure to allocate some good amount of time and effort to it to be able to become rich.
Why is buy and rent properties the best real estate investment strategy and the best way to become rich in real estate investing?
Despite some challenges, buy and rent properties is still the best way to become rich in real estate investing. Why?
1. Gives an endless opportunity to grow
The best thing about buy and rent properties is that you can keep growing all the time. You as a real estate investor should always use your rental income from one property to buy another one. Then buy a third one. And so on and so forth. That’s the snowball effect in real estate investing and the fastest way to get rich.
Related: Being a Real Estate Investor: How to Grow
2. Brings money in the short and long term
As said above, with buy and rent properties you make money both in the short term – rental income – and in the long term – appreciation. That’s how you become rich with it.
3. Is very active
In buy and rent properties, you – the real estate investor and landlord – are the one who makes all the investment decisions. That means that your return on investment lies with you.
What is some advice real estate investors need for buy and rent properties?
To succeed in the buy and rent properties real estate investment strategy and become rich, make sure to follow the pieces of advice below:
1. Choose your real estate investment location carefully
2. Select your investment properties wisely through investment property analysis. Use a rental property calculator like Mashvisor’s to predict the rental income, all expenses, and finally the profitability – cash flow, CoC return, and cap rate
3. Scan your tenants meticulously
4. Use professional property management if needed
5. Last but not least – grow as a real estate investor at all times and as much as possible
Related: How to Get Rich in Real Estate: 4 Different Cycles
Options within real estate investing are unlimited, and buy and rent properties is the best way to become rich in this business due to the reasons listed above. As soon as you are ready to start this exciting endeavor, make sure to come back to Mashvisor to choose from thousands of rental properties available across the US with the help of traditional and predictive analytics.