There is no doubt that everyone desires to ensure financial wealth and stability for him/herself. What are the options? Either you start working harder at your current job or you start investing in real estate. It has been proved multiple times that investing in real estate can make a real estate investor rich! However, how to make money in real estate? It is not as easy as it sounds, but do not be afraid- you have all the chances to succeed with investment properties! How, when there are so many investment strategies? Well, investing in rental properties is one of the best ways of making money in real estate. In order to find out what to know when buying income properties, make sure to read this blog.
#1 How to Make Money in Real Estate: The Reasons to Buy a Rental Property
Becoming a real estate investor is a challenging path and you constantly need to develop yourself when investing in real estate. As a future property investor, you might be curious: “Why is investing in rental properties the right thing to do?” Well, there are several reasons why you should consider buying a rental property. However, here is the main one:
Low Risk Investments
Income properties are considered to be low risk investments due to the fact that the number of potential tenants is constantly growing. People need to live somewhere and this ensures the targeted demand for many real estate investors. Therefore, when buying a rental property is done accordingly to all rules of investing in real estate, a property investor is able to start making a positive cash flow from the rental income in the first month.
Moreover, finding the right tenants and signing a contract with them will allow your income property to generate constant rental income. Thus, you will be able to manage the money your investment property generates. Another reason is that there is no need for a real estate investor to quit his/her current job. Being a landlord does not require your full attention. Therefore, you are able to stay at your current job while having a few income generating assets in your portfolio.
#2 How to Make Money in Real Estate: The Importance of a Real Estate Agent
One of the reasons for hiring a real estate agent is to help a property investor in finding the best deals. A real estate agent is the expert on investment properties as he/she knows how to invest in real estate as well as where to invest in real estate.
The biggest advantage of hiring a real estate agent is that he/she will have a proper education. This means that real estate agents know how to use various real estate investment tools, have a good network and etc.
Nevertheless, this does not mean that you cannot buy a rental property without the help of an agent. However, if you are becoming a real estate investor, it is better to hire a real estate agent as you will be able to learn from him/her for your future investments. Thus, you will know how to make money in real estate. Moreover, after a while, you will be able to invest in rental properties on your own. Curious to find out how to invest in real estate without an agent? Make sure to read “How to Buy Investment Property Without a Real Estate Agent.”
#3 How to Make Money in Real Estate: Buying a Rental Property
Some of the best real estate investments are considered to be Airbnb rentals and traditional rentals. Both investment strategies are great ways of making money in real estate. However, for owning one of the best real estate investments, you should choose the optimal rental strategy for the property. In order to understand what the optimal rental strategy for your investment property is, let’s first explore what the long-term rentals, as well as short-term rentals, represent.
Long-Term Cash Flow Properties
Traditional rentals, also known as long-term rentals, are the investment properties a real estate investor buys in order to rent out to tenants for a period longer than six months. So, why should you focus on traditional rentals? Firstly, with long-term rentals, positive cash flow is very achievable. However, you will need to establish a rent you are going to charge your tenants that will cover the costs. Secondly, when dealing with traditional rentals, you ensure a constant rental income. Moreover, if a landlord finds suitable tenants, he/she can relax for a while, collect the money every month and monitor the property. This is how to make money in real estate with long-term rentals.
Short-Term Cash Flow Properties
Want to find out how to make money in real estate? Invest in short-term rentals. However, you cannot just buy a rental property and decide that the optimal rental strategy is to make it one of the Airbnb rentals. You will make a fortune with short-term rentals if you invest in tourist destination points. More and more people prefer to rent Airbnb rental properties as the prices per night are usually cheaper than hotels. The biggest advantage of Airbnb rentals over traditional rentals is that the landlord can charge higher rent for the property. However, such properties also require a higher level of involvement. Curious to find out where to invest in real estate? Make sure to read “Buying a Short-term Rental Property? Invest in the Most Airbnb Friendly Cities.”
#4 How to Make Money in Real Estate: Conducting Real Estate Market Analysis
The key to success when buying either Airbnb rentals and/or traditional rentals is the location. Yet, it is a challenging thing for a future landlord to find the best real estate investments. Luckily for you, we know how to select the best income properties! Conducting a real estate market analysis is the key to selecting low risk investments.
The Importance of a Real Estate Market Analysis
Performing a real estate market analysis is a great way to analyze the neighborhood an investor has selected. Moreover, this analysis allows you to compare your selected investment property to its real estate comps before buying a rental property. This part is highly important in order to understand if the property price is set up too high. Besides, with real estate market analysis, you are able to explore the current real estate market and its characteristics. Additionally, knowing the property price will allow you to estimate the rent you will charge your future tenants. So, properly conducting a real estate market analysis is one of the answers to the question: “How to make money in real estate?”
Our advice is to use Mashvisor’s investment property calculator. With such a tool, the calculations of various real estate metrics such as cap rate, cash on cash return, return on investment, etc. are going to be completed quickly and more accurately. To find out more about the investment property calculator, make sure to read “This Is How Investment Property Calculator Eliminates the Need for Real Estate Market Analysis.”