Guide to Making Money with Rental Properties
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If you want to make money, then you should consider the real estate market. Did you know that people are making money with rental properties? Yes, purchasing rental properties is a good investment as well as good source of revenue. Here’s a mini guide to making money with rental properties to help you understand all about it. ~ Ed.
The real estate market is attracting a lot of new investors right now. There are some great properties being made available at stunning prices and getting into the market now may be the right thing to do for your portfolio. Market growth is at a healthy and sustainable rate too, so there is a lot to expect in long-term gain.
Of course, owning real estate that generates revenue is much better than owning properties that only generate expenses. Fortunately, the rental property market is just as hot as the real estate market itself.
It’s time for making money with rental properties. If you’re thinking about investing in rental properties, here are the most important things to know about the investment opportunity.
The Right Properties
The first thing to keep in mind when you want to invest in rental properties is the properties themselves. Looking for properties that sell well in the rental market requires some extra work.
You have to take into account the neighborhood, the amenities available near and around the properties you’re looking into, and the features offered by the property itself before making an investment decision.
Before buying a property in a particular neighborhood, look into property for rent in that area. You can get a better picture of what tenants expect as well as the amount of rent you can expect from a similar property. These details will also help you determine if a rental property is worth investing in.
Other details will affect your bottom line. Property taxes, for instance, are cost factors that must be taken into account before you make any purchase decision. The presence of schools and other facilities near the property also affects the amount of money you can charge for renting out the property.
You can start your journey into the rental property market by finding several lucrative options and comparing them. Searching for properties that work well in the rental market isn’t as difficult as you think.
Comparing them and choosing the right one to invest in, on the other hand, is more challenging. Take your time, review every detail, and invest in a property that suits your investment goals best.
Financing the Purchase
Even when you have enough money to acquire the property in cash, using the right loan to finance the purchase is often the best way to go.
You can easily find mortgage loans and other financing options designed specifically for investment properties. They come with lower interest rates and fees, giving you the opportunity to lower your costs even further.
There are a few things you want to do when searching for financing options. For starters, you want to get quotes from multiple financial institutions before deciding to settle for a loan.
Don’t hesitate to mention the fact that you are comparing financing options from different lenders; this will get you the best deals and even additional discounts on your interest rate and fees. Asking for discounts could also land you extra reductions on the cost of your loan; even the smallest discount is worth pursuing.
You also want to get the loan pre-approved before you move forward with your search. Having a rental property loan pre-approved gives you two added benefits.
First of all, you are seen by your lender as being more responsible, which means they will place you as a low-risk debtor and give you a better deal on the loan.
The second benefit is an instant settlement. With a loan already preapproved, you can offer a quick settlement to the property owner. This gives you better bargaining power and allows you to get the property at a better price.
Renting the Place Out
There are basically two big categories of rental properties: short-term rentals and long-term rentals.
Short-term rentals are attractive for the short-term rent periods and services like Airbnb help you get tenants from around the world. You also have more freedom when choosing tenants as well as deciding when to rent the property out; if you want to use the property yourself at certain times, you have the option to do so.
The short-term rental market is not without its disadvantages. The market is very competitive, so it is not always easy to maintain a high occupancy rate throughout the year. You also need to make sure that the minimum occupancy rate is met for the property to remain profitable. There are also local regulations to meet depending on the location of your property.
On the other side of the equation, we have the long-term rental market. This category involves renting properties out for a month or longer. Some tenants prefer renting your property on a monthly basis, while others may negotiate annual or bi-annual rent period to get better rates. Once the property is occupied, you can stop worrying about advertising costs and marketing the property to find another tenant.
The regulations governing long-term rental properties tend to be stricter. You have to meet certain requirements to be able to rent your properties out. Maintaining the property is also more challenging in long-term rent situation; you can delegate some of the maintenance tasks to the tenant, but you still need to deal with bigger tasks yourself.
Succeeding in the Market
While the rental property market is very lucrative, it is not without its challenges. There are a lot of investors currently entering the market right now, so timing is everything. Now is the perfect time to start investing in rental properties and acquiring tenants for them.
Marketing is a big part of that process. You can rely on services like Airbnb to rent out properties on a short-term basis, but alternatively, you can place ads on classified sites like Craigslist or have property agents help you with marketing your rental properties to the right audience.
You can even count on Google AdWords and Facebook Ads to market your properties. The majority of potential tenants are on the internet searching for the right property to rent. Craft your ads to suit those potential tenants; offer the right set of amenities and services, and the rental property market will be a fantastic source of income for you.
Whatever you decide to do, it’s a good idea to spread your investments and not put all your eggs in one basket. With that being said, you can purchase rental properties in various target markets, for example, city property and beach properties attract different tenants.
Making money with rental properties can be quite a life changer. Hope this guide helps you.
Over to you
I would love to hear about your real estate investments and future plans. What have been the most successful investments for you, that yielded the most returns to date?
Disclaimer: Though the views expressed are of the author’s own, this article has been checked for its authenticity of information and resource links provided for a better and deeper understanding of the subject matter. However, you're suggested to make your diligent research and consult subject experts to decide what is best for you. If you spot any factual errors, spelling, or grammatical mistakes in the article, please report at [email protected]. Thanks.