A rental property is an income-producing property zoned either residential or commercial. This property is directly utilized as a high-end investment by the owner. Investment properties can provide a means of income, either primary or supplemental. They allow investors to engage in the act of portfolio diversification. They may also provide a means to profit from a property that is unable to sell on the market.
What are the Top Examples of Rental Properties?
Rental properties include single-family homes, multi-family homes, apartments, townhouses, condominiums, vacation homes, retail suites, office spaces, and more. In short, any available space that is considered marketable may be utilized as a rental property according to the purposes for which said property is zoned.
Why is Rental Property Investing a Sound Investment?
There are many reasons why people turn to real estate for income and buy their first investment property. The following outlines the top reasons why this type of investment is considered to be a sound investment:
- Purchasing with Leverage – When investing in rental properties, you have the ability to borrow from the bank or use the money from another financial source to aid in increasing the overall potential for return. In short, this is known among investors as “leverage”. It is a great way to invest because you do not necessarily have to have a total of 100% of the money to initially make a purchase.
- Optimal Returns – When purchasing rental properties, you have the capability of leveraging both your time and your unique abilities to produce optimal returns. As an investor, you may actually put your skills – be it plumbing, painting, or polishing – to work to completely rehabilitate a property. If you are good at marketing and/or networking, you may integrate those skills into the endeavor. The amount of money that you make is up to how much you hustle.
- Direct Management – As a rental investor, you have the ability to directly management your business. You may choose to take total responsibility for the outcome of what you have invested. While it is true that hiring a professional property management is the best way to go when you have rental property, if you so desire, you may manage it yourself. That is ultimate freedom!
- The Demand – The next benefit to investing in real estate is the fact that there is always a demand for places to reside. While it is true that a real estate market will go up and it will come down, rentals are always in demand. This means that your investment is one that will provide you with long-term benefits. Traditionally, most people had a desire to own their own homes; however, that is not the case in today’s world. With increasing food costs, utility expenses, the prices of building supplies, and the increase in the value pertaining to mobility, more and more people are choosing to rent over buying.
- Past Successes – When you research rental property investments of the past, you will quickly find that millions of people have achieved success in this endeavor. It is documented that landlords have acquired massive amounts of wealth throughout the dawn of the human civilization. It is such a successful endeavor that it has been established that approximately 28 million people in the United States currently own residential-based rental properties.
- Stability and Predictability – Real estate investors will attest to the fact that the market is one that has a high level of stability and overall predictability. It is not about “buying low and selling high”. You only make the initial purchase and invest the necessary amount of money to bring the property up to par and then rent it out, over and over again! This means that you will have a steady flow of cash from your tenants on either a weekly or monthly basis – however you charge. Once the property is paid for, all that you make immediately thereafter is all profit! Not only that, you will continuously have that profit coming in to your bank!
- Variety – If you specialize in rental property management, you will find that there is a lot of variety! You may invest in houses for one family, multiple families, stores, multiple stores, offices, and more! The possibilities that you will have in front of you are almost completely endless!
- Great Finds – As you research the real estate market for homes and other types of properties, you will find that there are not only a lot to choose from but that you are likely to stumble across some absolutely amazing deals. Let’s say that there is an estate sale and the family is just looking to sell out and move on. You may be able to get your hands on that property for a very little amount. For example, you could easily obtain a $250,000 high-end home for $100,000 because the family just wants to be free of it. We once knew an individual who became her father’s legal guardian. He had numerous rentals that she had to sell as quickly as possible to put towards his care. She let one small home on a corner lot go for $5,000 because it needed so much work and had to sell it “As Is”. If you do the research, you will be thrilled at the deals you find!
- Insider Secrets – While “insider trading” is frowned upon on Wall Street and may land you in jail, it is not illegal in the world of rental investments. You may use any type of secret or insider information that you obtain in order to fuel your business. Let’s say you get wind of a major retailer coming in to an area of town where there is an old, abandoned motel. You can buy this up and wait for the retailer to buy it from you and make a profit. THEN, you can take that profit and construct multi-family homes near where the retailer will be located for tenants. In this instance, low-income families or the elderly could benefit because of the close proximity to the retailer. They will not need a vehicle, may not have to take a bus, and may even have immediate access to employment opportunities at the retailer. As a result, you are sure to keep the units rented!
- Easy Money – Rental investments will allow you to make money around the clock without you even being there! You do not need to be physically present. It is like a well-oiled machine that just keeps placing money in your pockets! This is – generally speaking – a passive income activity. Not only that, you may always reach out to professional property managers. The companies that offer these professionals will handle maintenance, repairs, upkeep, lawn and landscape needs, collect money, and more! You simply cannot beat this opportunity!
How Much is Needed to Start in Rental Property Investment?
Many people mistakenly believe that they need to save up a lot of money to get started in rental investment. As an investor, you just need to apply a tad of force and you will find that you are capable of achieving great results. In most instances, investors will take out a loan from any number of sources. Basically, you just need decent credit and a little bit for a down payment. Once this is in place, the loan that you obtain will kick in and will take care of the remaining balance. Then, pay the loan back in small increments each month.
Getting Help with Your Investment Business
If you want to break into the rental property business, it is best to work with a property management company. The professionals at this company will help you understand the market, the role that your investment will take on, how to manage that investment, and will outline the risks associated with any given rental property. These professionals will help identify investments that maximize your return on investment. That is the goal, after all. You do not want to snatch up a good deal only to find that you face immense expenses to get it habitable.
In addition to helping you discover sound rental property investments, property managers can take on many roles in your business. They have the ability to screen tenants, collect rent, and handle all of the other administrative tasks that are involved in your business. You no longer risk being woken up in the middle of the night due to emergencies – such as plumbing leaks.
Your property management team will handle maintenance, repairs, and many other services – all for a very small fee! You will enjoy the profits while your business runs on “auto-pilot”.