A rental investment property is a form of real estate purchased with the intent of generating income through the means of collecting monthly rent from tenants. The rental income is intended to pay off the property and result in a return on investment.
Investing in Real estate is considered one of the safest and fastest paths to financial success. If you have entrepreneurial ambitions and a desire to reach new levels in terms of financial success, an investment property may be just what you need to begin your journey.
Potential for Profit
The act of buying, the process of managing, and even selling real estate has a high potential for profit. If you are interested in short-term profits, your best bet is to flip or rehabilitate structures.
If you are in search of long-term profits, rental investment properties is the way to go!
To achieve the highest potential for profit, one of the key factors is volume. In short, the more properties you possess in your portfolio for the longest amount of time will generate the highest level of income. This is a key point that you must understand and place an emphasis on in order to truly succeed in your business.
Is it Worth it to Invest in the Housing Market?
Yes, it is definitely worth it to invest in the housing market. This market – historically speaking – performs exceptionally well. When compared to other types of investments – such as commodities or stocks – real estate investment is less risky, far less volatile, and far more predictable.
Values increase and decrease over the years. The market even experiences some flat years; however, the one niche that is consistently low in supply and high in demand is rentals.
Not only will you experience the positive income that is generated from rentals, but you will also be able to benefit as a result of the reductions of the principal associated with any loan you have and by way of tax savings.
Why are Rentals in Demand?
Generally speaking, renting is considered ideal among individuals throughout the United States for many reasons. First, those that rent are not responsible for paying property taxes. Second, renters do not have to worry about the maintenance expenses on their rental or any associated repair expenses that become necessary.
Homeowners are required to pay their property taxes, take care of maintenance and repairs, and their insurance. Renting is ideal because it includes many amenities that are – essentially – “free” to the tenant.
In addition to this, renting allows tenants to easily move from one location to another. By acquiring rental investment properties, you are getting in on a market that is very high demand and the potential to render massive profits is completely possible.
Is it Possible to Get Rich with Rental Investment Properties?
In short, the answer is “yes”. By owning and renting out real estate, you can add to your overall net worth. You may successfully contribute to your retirement. It is definitely a pursuit that allows you to successfully accumulate wealth; however, you should not expect to get rich fast. It will take time.
You need to know what you are getting into, be capable of making smart decisions, recognize the fact that there are risks and do what you have to do to overcome those risks and make an effort to do what needs to be done to get from where you are to where you want to be.
It is often a slow process, but definitely a promising one.
What is the 1% Rule?
In real estate investing, you must know the 1% rule. In short, this measures the overall price of the investment rental property to the specific gross income level that it will be generating. To meet or follow this rule, the rent that is charged each month must be equal to or above 1% of the total purchase price.
Just take the purchase price of a property you are interested in and multiply it by 1%. The result is the amount that the property should go for – in terms of monthly rent. If you have maintenance fees, repair fees, etc. you should include this in the total price of the investment.
- For example, if you want to purchase a home to rent out that is $200,000.00 but you have to pay $20,000 to get the home repaired and up to code, you would multiply 1% times $220,000.00. This would total out to $2,200. That means you would need to charge – at the minimum – $2,200 a month for rent. Let’s not forget property taxes, maintenance, and homeowner’s insurance. To cover these expenses, you would likely need to charge a minimum of $3,000 a month. If the property can be rented for that amount, then it is likely that you have obtained the perfect investment property!
Is it Possible to Make a Rental Investment Property Easier and Cheaper to Run?
Yes, it is very possible! You could do all of the work, repairs, and maintenance yourself to save money. This on top of the administrative tasks, though, may not be feasible.
While it may cost a service fee, it is best to enlist the assistance of a property management company.
Not only does a property manager specialize in administrative tasks, they also help in managing the day-to-day operations, maintenance, and repairs. Sure, you may be putting out a little bit more in the beginning, but – over time – you will save both time and money, meaning that the investment was definitely worthwhile.
What is the Difference Between a Rental Property and an Investment Property?
An investment property may be a rental property, but not all investment properties are rentals. An investment rental property is one that is leased to tenants in an effort to general a rental income. The owners of investment properties typically do not live on the premises. That is, unless it is a multi-family structure.
In some of these instances, an owner may also reside on the property. If you are using a loan for an investment rental property, most financial institutions require that the property cannot be occupied by the owner.
Pioneer Property Management
If you are interested in obtaining a rental investment property, we here at Pioneer Property Management are capable of assisting you. We have a list of available properties – many of which are not advertised. In addition to this, we also offer property management services.
We can take all of the work out of the entire process – from marketing, showings, tenant selection, legal forms, and rent collection to maintenance, upkeep, and repairs. If you want to achieve success in your real estate business, we can assist you!
In short, we develop a partnership with you. We then handle all of the tasks and projects associated with your business. Think of it as putting your business on “autopilot”. We offer numerous warranties. As a landlord, you can rest assured that you will experience zero evictions when working with the tenants that our company approved. We have served customers just like you for over 14 years and are still going strong. It does not matter if you are just starting out in the rental investment property business or you are seasoned, we offer something for everyone – at all levels. If you would like to learn more, we encourage you to call us today!
