As a beginner real estate investor, let us introduce you to the best real estate investment strategy: rental properties! Yes, that is true. Read this article and learn how to invest in rental properties as a new real estate investor.
So, let us go straight to the main steps on how to invest in rental properties:
How to invest in rental properties: Real estate education
The first step to learn how to invest in rental properties is real estate education. You can’t go about doing anything at all without the proper education. However, we are not saying that you must have a college degree in a related subject. All you need to do is learn the basics. These include calculating real estate metrics, performing real estate market analysis, and conducting investment property analysis.
The good news is that real estate education can be obtained from various sources. You can read books written by real estate experts. You can also register for courses or even hang out with experienced real estate investors. Whatever you feel comfortable with, it is up to you. Just make sure to focus on the basics so you can start your investment in real estate on the right track.
Related: Real Estate Investing Terminology: Investment Property Calculator
How to invest in rental properties: Define your financial situation
Defining your financial situation simply means that you should know your financing strategy. If you have the money to invest in a rental property, you can pay all in cash. If not, then you should look for a financing method to go with. The thing that makes rental properties the best real estate investment strategy is easy financing. Most of the time, you should be able to qualify for a mortgage. Whether you get it from a bank or even a mortgage brokerage, it does not matter. Just make sure that their terms suit your investment goals and you are capable of paying on time. The last thing you want here is to get a loan with requirements you cannot meet, therefore getting yourself in a sticky financial situation!
How to invest in rental properties: Choose the right rental strategy
Part of learning how to invest in rental properties is choosing the right rental strategy. There are two rental strategies you can go with when investing in rental properties: traditional rentals and Airbnb rentals.
- Traditional rentals are great for they provide you with a stable rental income for the whole lease duration. This means you will not have to worry about vacancies for a long time. Moreover, traditional rentals come with many tax incentives. Your rental property is subject to tax deductions that apply to property expenses and depreciation.
- Airbnb rentals are great as well, especially for new real estate investors. They are short-term rentals, which means that you get to deal with all kinds of people. Besides, it saves you the struggle of dealing with bad tenants as Airbnb provides you with a guest review. Moreover, Airbnb rentals are the ultimate rental strategy to make money as it is very popular lately. It is targeted by short-term visitors who are looking for cheaper accommodations.
Related: Investing in Rental Properties: Pros, Cons and the Best Ways to Make Money From Them
How to invest in rental properties: Choose the right kind of rental property
Here comes the interesting part of investing in rental properties. This strategy offers a wide variety of investment properties to choose from. Let us take a look at what types of rental properties you can invest in, in order to make money in real estate:
- Single-family homes: These properties are good for beginner real estate investors. You can choose your first rental property to be a single-family home. It is easier to manage, and you will not have to deal with multiple tenants at once.
- Multi-family homes: A multi-family home is another profitable type of property that will secure a good rental income. Basically, multi-family properties are units that share walls located in the same building. The good thing about it is having multiple housing units to rent, which means multiple rental incomes. It is a great way to secure your mortgage payments as well as to make enough money to purchase more investment properties.
- Studios: Studios are popular, especially, in university and employment industry areas. The only thing to take into consideration is the location. A good location will make this rental property the ultimate money making machine for you. Learn what it takes to invest in studios, and do not be afraid to do so.
However, these are not the only types of rental properties to make money in real estate. You can choose to invest in condos and apartment buildings if you wish to. These are also great investment properties to make good money through real estate. However, whatever rental property you choose to invest in, make sure you define your finances properly. You do not want to go beyond your financial capabilities and end up not paying your mortgage on time.
How to invest in rental properties: Use an investment property calculator
An investment property calculator is a tool used by real estate investors to calculate the metrics of return on investment. This tool is very powerful and is very important. Basically, it calculates real estate metrics like the cap rate, cash on cash return, cash flow, property expenses, and your rental income. This tool is considered the best as it helps in performing real estate market analysis as well as investment property analysis. It provides real estate investors with accurate metrics which makes it easier for them to understand where they stand in terms of real estate investing. It is especially great for new real estate investors as it is easy and fast to deal with. So, make sure you learn how to use an investment property calculator in order to achieve your financial goals.
Related: Mashvisor: A Real Estate Investing Tool for All Your Investment Needs
How to invest in rental properties: Use Mashvisor to buy your first rental property
Mashvisor provides real estate investors, both new and experienced, with a wide platform of listed properties for sale. So, make sure to check out these properties to find your first rental property to start out in real estate investing. Mashvisor is also a great tool for you to use in order to obtain real estate education through blogs and articles. We dedicated a huge portion of our blogs to the matter in order to teach you how to invest in rental properties. So, make sure you check these out!
