If you are reading this blog, then you want to be a successful real estate investor. You might have various questions, like: “What are the best real estate investment strategies?” as well as: “What are the best places to invest in real estate?” Our answer is long term rentals! Today we will explain what you should do to become a successful investor with long term rentals. Additionally, we will explore the benefits of investing in traditional rentals. Are you interested? Then keep on reading and take your first steps to success!
#1 About Rental Properties
Before you start with real estate investing, we would like to review rental properties in general. The prosperous real estate investor should know that rental properties are a type of residential real estate investment. You may invest either in long term rentals (also known as traditional rentals) or in short term rentals (most popularly known as Airbnb rentals). Your choice depends on which is the optimal rental strategy for you and your business.
One of the best places to invest in real estate is long term rentals. This is due to the fact that long term rental properties generate a relatively constant rental income. This is a huge benefit as the main purpose for real estate investing is, of course, to make money from the income you get from your tenants. However, to succeed as a real estate investor, you need to be well prepared in the real estate market of traditional rentals.
Related: 8 Reasons Why Rental Properties Are the Best Income Investments
There are many factors to take into consideration before putting your financial assets in a long term rental property. For instance, you need an estimation of whether or not the chosen investment property will generate positive cash flow. Additionally, you need to compute the potential traditional rental income that the rental will provide you with.
However, calculations are simply not enough! You have to choose the optimal rental strategy– long term or short term. This means that if you want to invest in traditional rental properties, you need to find a location suitable for that. For instance, the demand for long term accommodation in the area should be high. It might be that the city/town is home to a university, offers various job positions, etc. Further down the line, it is important to establish the price of the monthly rent you will charge your tenants with.
It may sound very easy on paper, but in real life, you will have to work very hard to become a successful real estate investor. That is why we will explore what steps you need to take in order to be prosperous by financing long term rentals. But first, let’s reveal why long term rental properties are a good investment opportunity.
#2 Long Term Rental Properties Are Low Risk Real Estate Investment Strategies
Another reason you will succeed as a real estate investor with traditional rentals is that long term rentals are low risk real estate investment strategies. Why is that so? Well, people need to live somewhere, thus, there is a constant search for long term accommodation. Nowadays, people are more inclined to rent rather than buy a property. This is one of the reasons why traditional rentals are so successful. Moreover, if, for some reason, you get a negative cash flow from your long term rental property, you can always sell it at a good price. However, if you use Mashvisor’s tools to help you to find the right traditional rentals, you will end up with a successful investment as it will generate constant traditional rental income. More on that topic to follow.
#3 How to Be Successful with Long Term Rentals: Forget About Airbnb Rentals
Let me explain why you should focus more on long term rentals than on Airbnb rentals:
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Positive Cash Flow:
Every landlord wants to make sure that his/her property generates a positive cash flow. However, with long term rentals, positive cash flow is very achievable. Still, you need to establish the appropriate rent charge to cover all the expenses. Other than that, you are able to ensure positive cash flow with less effort compared to short term rental properties.
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Constant Traditional Rental Income:
One of the important things you should know is that the rental income from short term rentals is not as consistent as with long term rentals. There are many reasons that influence occupancy rate of short term rentals. For example, short term rentals are associated with seasonality. This is not the case with long term rentals, as tenants who seek that kind of accommodation are willing to live in the investment property, not simply spend their business trip/vacation in it. Consequently, long term contracts are signed, which ensures the constant inflow of traditional rental income. In addition, once you have found your long term tenants, you can relax for a while. This is not the case with Airbnb rentals, where you need to persistently drag tenants’ attention and attract them to your property.
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Appreciation:
Another benefit of investing in long term rentals is that probably this investment property will increase in value over time. This is called real estate appreciation. It means that you will not only receive money from your tenants but the value of your property will go up. Of course, that depends on several factors, such as the real estate market, the area of your investment, etc. However, there is a real possibility that you can, later on, sell your rental property for a higher price than you bought it. Meanwhile, you would have been receiving rental income from the property. So, that is a great plus, don’t you think?
Related: Is It OK to Invest in Real Estate Just for Appreciation?
#4 Successful Long Term Rentals? Use Mashvisor’s Rental Property Calculator!
The rental property calculator can become your best friend in real estate investing pretty quickly. The tool presents you with an accurate computation of various real estate metrics in no time. Therefore, by using the rental property calculator, you eliminate the need to conduct investment property analysis manually. The biggest benefit of using this tool is that it saves time and effort. Additionally, by using it, you avoid the possibility of making a mistake, while calculating the numerous values you need.
But why should you use Mashvisor’s investment property calculator? Well, Mashvisor’s rental property calculator will show you the best places to invest in real estate on a neighborhood level. Hence, our investment property calculator will present which neighborhoods in the US are suitable for real estate investments. Additionally, it displays the optimal property type as well as the optimal rental strategy. Last but not least, the tool will provide you with a detailed property as well as neighborhood analysis. The latter will give you a real perspective vision of investing in the specific rental. So remember, when you want to start with real estate investing, use Mashvisor’s rental property calculator.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Related: Using Mashvisor’s Investment Property Calculator to Estimate Rate of Return
Are you curious to learn more about long term rentals? Well, luckily for you there is a ton of information available on Mashvisor! Do not waste your time and visit Mashvisor to get more tips on how to become a successful real estate investor!
