Making money in real estate has never been easier with rental properties. So, what makes investing in rental property the ultimate way to succeed in real estate investing?
Why Investing in Rental Property is The Best Way for Making Money in Real Estate
#1. It is easy to start and easy to finance:
When investing in rental property, you do not have to have a college degree of any kind. All you need is some basic knowledge which you can acquire from the internet, real estate books or even reading a few blogs.
Another major advantage of investing in rental property is investment property financing. Rental properties are, in fact, the easiest to finance in real estate investing. Not only that but also you can find a variety of financing deals that you can apply for. Therefore, for beginners, especially, we recommend that you start with rental properties and grow from there.
#2. You play by your own rules:
If you are the type of person who doesn’t like to be bossed around, then investing in rental property is the way to go. Not only do you get to be your own boss, but also you will be playing by your own rules. Moreover, you get to experiment with all the different investment strategies.
#3. You get to invest passively:
The best way to make money in real estate without much effort is investing in rental property. You can do that by buying investment property and hiring property management companies to do the work for you. A property management company will provide you with their best professionals in managing rental properties. They will take care of all the daily operations of your rental properties. All the while, you can sit back and enjoy the positive cash flow each month.
Related: Can Airbnb Investment Properties Be Passive Income Investments?
#4. You benefit from property appreciation:
There are so many types of real estate properties in the market with different appreciation rates. However, investing in rental property, especially, single-family homes, guarantees a higher appreciation rate than other types of property.
#5. Tax advantages:
Tax benefits are probably the most interesting part for real estate investors. Investing in real estate properties offers real estate investors tax deductions on various property expenses. These deductions also apply to losses or negative cash flow properties. Even though it might seem like a little money, still, it is one of the key elements for investors for making money in real estate.
#6. More stability in the market:
No matter how the real estate market is doing, there will always be demand for housing. This makes investing in rental property amongst the safest investment strategies in real estate investing. Even during the recession, landlords were the least to suffer compared to stock investors. Therefore, if you are looking for the lowest-risk investment strategies, we recommend that you start investing in rental property.
How to Sustain a Business Investing in Rental Property
Of course, the real estate investing business is not all about the starting point. It is also about sustaining the business at a successful level in order for you to continue making money in real estate. Therefore, here is what you have to do:
#1. Do a lot of research:
Before getting into the real estate investing business, make sure you research. First of all, learn the terminology and the abbreviations. For example, there is the return on investment in real estate. It is a metric that indicates cash you will have in return on what you have invested. However, it is also referred to as the ROI.
Second, research the various property types in real estate investing. There are single-family homes, multi-family homes, condos as well as studio apartments. Look for the most profitable type of property that actually generates a positive cash flow.
Last but not least, research the best places to invest in real estate. Location is key to successful real estate investing. Your goal is to enjoy a monthly rental income which depends on your occupancy rate. Therefore, what you are looking for is places that have the highest demand for rental property.
Related: 5 Tips on Researching Investment Properties
#2. Learn to perform rental property analysis:
Now, when buying investment property, there are measurements to take into account. The most important one is the return on investment which is calculated either with the cap rate calculator or the cash on cash calculator. These measurements fall under the title “rental property analysis” which basically calculates the rental potential of an investment property. Sure enough, you will also have to perform this procedure at least once a year to make sure that your rental properties are generating positive cash flow.
#3. Learn all about real estate market analysis:
The real estate market analysis is a very important process when buying investment property. When you perform this kind of analysis you are basically examining the real estate market. It allows you to get a better understanding of the real estate investing business by analyzing the best places to invest in real estate. Therefore, you get to compare your rental property to other similar ones around the same location. This will have a huge impact on the rental income you will receive as a result.
Even though you could perform this process manually, we prefer you use real estate analytics tools that are specially designed for such tasks. The most important one is the rental property calculator. It will help you perform both rental property analysis as well as a real estate market analysis. For more details on the rental property calculator, visit Mashvisor’s blog.
#4. Learn all about real estate property management:
Real estate property management is basically taking care of the day-to-day operations of the property. Therefore, in order to sustain a successful business, you have to learn to manage the property, unless you are planning on hiring someone who is an expert on managing rental property. Investment properties that are well managed seem to yield higher rental income, therefore, higher return on investment rates. So, you want to make sure that your property is taken care of.
However, you should take into account the expenses that come with property management. If you hire professionals for managing rental property, you will have to pay them a monthly property management fee. Thus, you can still save that money by learning to do it yourself.
Related: Investing in Rental Properties: Best Choice for Beginner Real Estate Investors
For more blogs on investing in rental property as well as boosting your rental income, make sure to check out our blog.
