When it comes to buying an investment property, most of the beginner real estate investors are searching for the best real estate investments. However, what are the reasons some of the income producing assets are called “the best income generating assets”? Curious to find out what these are exactly? Then, keep on reading.
#1 The Best Income Generating Assets: Long Term Rental Properties
One of the best real estate investments is long term income properties. With such income producing assets, potential tenants can rent long term. Of course, the length of the period depends on the lease agreement signed. Due to the lease agreement, the landlord ensures that his/her investment property will generate rental income on a periodic basis. This is one of the reasons why such properties fall into the category of low risk investments. Moreover, the maintenance costs are lower with traditional income generating assets as the tenant turnover rate is lower.
#2 The Best Income Generating Assets: Short Term Rental Properties
How to make money in real estate? Easy- by investing in Airbnb rentals. Moreover, short term income generating assets are considered to be one of the best real estate investments. Such rental properties are being rented by tenants short term, usually starting from a single night to a couple of weeks.
This real estate investing strategy can generate a very high rental income, even more than traditional income properties. Another big advantage of Airbnb rentals is the flexibility. During the peak seasons, the landlord may raise the rent and, thus, increase the potential rental income. Consequently, the profit that the income property generates increases.
However, location is the major determinant of whether the chosen rental property will generate enough money in terms of rental income. Make sure that the location of the investment is in a top tourist destination or business point. Moreover, there are many restrictions and new laws, concerning Airbnb income properties. Every state and city has its own rules that affect the profitability of the business. This is a very important aspect to consider when you plan on making money in real estate. Curious to learn more about short term rental properties? Make sure to read “Real Estate Investment Strategies Guide: Short Term Rentals.”
#3 The Best Income Generating Assets: Types of Real Estate
Do you wish to have an investment property which generates stable rental income? Then real estate investors should turn to traditional rental properties. Maybe you desire your property to generate even higher nightly rental income? The answer is obvious: Airbnb investment properties! However, only selecting the real estate investing strategy is not enough. You should choose the best investment properties from the numerous types of real estate if you plan to succeed.
Single family homes are seen as one of the best types of real estate due to several reasons. First of all, these income generating assets are more affordable than other types of real estate. Single family homes require a lower initial cash investment. Second of all, there will not be any extra maintenance, such as the expense of common areas, unlike with multifamily investment properties. Third of all, tenants tend to take better care of the single family homes rather than apartments as these types of real estate tend to feel more like home. Another reason, buying an investment property of this kind is much easier is that mortgage lenders are more than happy to finance such income generating assets if the real estate investor puts the down payment of at least 20%. Additionally, the demand for such types of real estate is always high, resulting in such income producing assets to be described as low risk investments. Curious to learn more about single family homes? Make sure to read “Single Family Homes: How Much to Charge for Rent.”
#4 How to Be Sure the Real Estate Investor Has Selected the Best Income Generating Asset
There are two types of analysis real estate investors should know about before buying an investment property. Why not skip just the analysis? The reason is simple: if you want to know how to make money in real estate with certain income properties, then you should know how to conduct an analysis.
In order to know how to make money in real estate, the investor should know how to proceed with the selection of particular income generating assets. Conducting the real estate market analysis will bring many real estate investors closer towards the main goal- making money in real estate. So let’s explore the first step every investor should take.
Real estate market analysis is a study of the current market values of income properties, comparable to yours, which is used as a tool for estimating the market value of your own income generating assets or asset. So, in order to find the market value of selected income generated assets, the real estate investor should analyze the investment property. This is where investment property analysis enters the process. Investment property analysis is the process of estimation of the level of profitability a particular investment can achieve.
Investment property analysis is a difficult and time-consuming process as there are many aspects to take into account. For instance, real estate metrics are one of the aspects real estate investors need to take into consideration. Some of the factors have a straightforward effect on the performance of a rental property. However, other aspects you should use to determine the performance and compute the returns. What is important to note is that the market value of low risk investments, for instance, which you have estimated after doing the real estate market analysis is subjective. Interested to learn more about real estate market analysis? Make sure to read “How to Conduct Real Estate Market Analysis Without a Real Estate Agent.”
In order to start making money in real estate, you should act fast to select the best real estate investments. Mashvisor is here to support all your steps in this process. To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.