The real estate business is seen as the best way to invest money. Many beginner investors enter this lucrative market to make a fortune and to ensure financial wealth. There are many investment strategies that the real estate investor can choose from. However, most of the beginner investors tend to select low risk investments to start with. Rental properties are exactly one of those! Interested to learn why it is considered as the best way to make money? Keep on reading!
#1 Rental Properties Are in Demand
Let’s keep it simple. People will always need a place where they can live and call home. So, if they cannot afford buying an investment property, they will turn to rental properties. Consequently, making money in real estate through rental property investment will never go out of fashion. Moreover, stay calm, as there will always be a demand for rental properties in any real estate market! Thus, income properties are categorized as “low risk investments.” Still, the real estate investor needs to monitor the real estate investing market in order to select the optimal rental strategy. This should be done to ensure that the rental property investment will generate good rental income that will be more than enough to cover the rental expenses. The best way of choosing the rental property investment is by using Mashvisor’s rental property calculator.
#2 Cash Flow
Long term rental properties and short term rental properties are considered the best real estate investments. Either (short term or long term rental strategy) is seen as a great opportunity of making money in real estate. However, the investor should monitor the real estate investing market in order to meet the demand and make money. So, let’s explore both rental property investment strategies.
Long Term Rental Property Investment
Usually, long term income properties are rented out to tenants for more than six months. So, why should the real estate investor consider this rental strategy? Well, positive cash flow is very achievable with traditional rentals. Still, the real estate investor should determine the rent that will cover all the rental expenses. Moreover, by signing the lease agreement with tenants, for a certain period of time the real estate investor ensures a constant rental income. Consequently, you have the chance to relax while your income property generates you money. This rental strategy is seen as one of the best ways of making money in real estate. Interested to learn how to find traditional rentals? Make sure to read “Traditional Rentals: Finding Income Properties Using a Heatmap.”
Short Term Rental Property Investment
Many real estate investors consider buying an investment property and turning it into an Airbnb rental property as the best way to invest money in real estate. In order to make a fortune with this real estate investing strategy, the investor should buy the rental property investment in the top tourist destination points. Additionally, prices per night are cheaper than those a hotel charges. Thus, many travelers prefer renting vacation homes through Airbnb. Moreover, the greatest benefit against long term rentals is that the real estate investor is able to charge a higher price per night. Nonetheless, if you want to make sure you are buying an investment property that will make you money you should use Mashvisor’s rental property calculator.
#3 Easy to Finance Rental Property Investment
Interested in knowing what is the best way to make money? Easy: you should consider buying rental properties. Financing investment properties is seen by many real estate investors as the hardest part of the whole process of buying low risk investments. However, when considering to buy rental property investment, it is not as difficult as it may seem. There are numerous possibilities to finance your investment property. For example, one of the most common ways to finance the rental property investment is through applying for a mortgage. Moreover, if you have little or no money, you have all the chances to enter the world of real estate. For instance, private money lenders and hard money lenders are great options the real estate investor should consider. Interested to learn more about financing options when considering various investment strategies? Make sure to read “4 Investment Property Financing Methods.”
#4 Investment Properties Payoff Themselves
Most real estate investors take the same steps. For instance, applying for a mortgage loan when buying an investment property and turning the investment into a rental property is pretty common among real estate investors. Finding the potential tenants, establishing the rent and covering the loan with the rental income the investment property generates follows. This is considered as one of the best investment strategies as you do not have to pay the loan yourself. Plus, at the end of the loan term, you will own an investment property for which you did not pay for, except for the down payment if there is one.
#5 Buying an Investment Property Low and Selling High
Every real estate investor should know how to buy the investment property cheap and later on, sell for a higher price. What is meant by that? In the real estate investing market, there are many investment properties that are categorized as “best real estate investments” that the real estate investor can buy below the market value. For instance, short-sales, foreclosure, etc. The reason for this might be because the owner cannot proceed with monthly mortgage payments or he/she needs to move to another state, for instance. This might be the best way to make money, as the real estate investor would invest less and sell it for a much bigger price later in time.
#6 Tax Benefit
Another thing the real estate investor can do in order to receive a bigger portion of money is to apply various tax deductions. Moreover, he/she may receive tax benefits to his/her rental property investment. For example, the investor can deduct property taxes, deduct mortgage interest, etc. All these advantages will positively influence the amount of money the real estate investor gets. This is one of the reasons income properties are seen as the best real estate investments. Curious what those tax deductions are? Make sure to read “All You Need to Know About Investment Property Tax Deductions.”
Do not waste your time and start looking for the best way to invest money. Need suggestions? Mashvisor can help! To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.