Figure 1 Is it a good idea to invest in rental real estate? Alt. Building.
Investing in real estate consists of buying, owning, managing, renting or selling properties for profit. Real estate industry has grown drastically over the years, and so have the challenges. With so many options at hand, we must ask ourselves – is it a smart move to invest in rental real estate at this moment? There are many things that need to be taken into a consideration before making your first move, but we will try to help you create an opinion and make your first decision.
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Real estate investments in 2018 look promising
If you want to start investing, but you are not sure if you should pick stock or real estate as your new investment – we suggest you reconsider investing into a real estate market once again. Owning a property is almost always a safe investment. When you buy an apartment, house or any other kind of a property it is very unlikely that you will experience a major or total loss. Why is that? Well, this type of investment is secured by a physical asset. Also, people will always need a place to live, and it is not a surprise that many investors put their money on something that is always in a demand. Real estate is a long-term hold, and you won’t depend on market after making your first move. In the vast majority of cases, it is stable and it will retain its value over the period of time. But, let’s see why you should invest in rental real estate:
- Your tenants will pay for your investment.
- The value of your property will only increase over the years.
- If you invest in rental real estate, there is almost no space for failure with so many options and opportunities.
Let your tenant pay for your investment
If you are interested in long-term real estate investments, you should be aware of some positive facts first. The number one reason to get in this business is to generate a passive income. This type of investment will not only build equity, but it will also produce positive cash flow. With every mortgage payment that comes from your tenant’s rent you will be paying for your investment with someone else’s money. So – why not? This is a win-win situation, and you should use it at your advantage. Also, if you are not a professional real estate investor, renting your property is the safest way to get your money back, even if you haven’t used a loan as a payment method.
Figure 2 Soon after you invest in rental real estate you will realize more than one way to get your investment money back. Alt. Laptop, notebooks, cactus, coffee, glasses and phone. the value of your property can only grow
We know that getting started in a new field is never easy, but believe us – becoming a real estate investor is simple and safe. There are so many financing options that you should explore and use as an advantage. Make a strategy, and be patient. Invest some money, and wait. It will pay off in the long run. Or, if we look at the past few years – not so long run.
We all know that investing in this market requires a lot of money, but the situation here is much different then with the stock market. You don’t have to be a professional broker. Also, you won’t need all that luck. The only thing you should do is to try to make the smartest possible move, and hope for the best. But, either way rest assured – the value of your rental property will only grow.
Leverage your capital
Just like we have said previously, you should use many different financing options as a leverage. Unlike with other markets, when you invest in rental real estate you can buy a property with cash combined with a loan. This is an aspect used by many investors who secure many mortgages and grow their business with only 20% down payments. This is a great option if you want to use conventional financing as an advantage – use your cash to purchase more properties and maximize your investing opportunities.
Figure 3 Do your research before you make any moves. Alt. Image of a building.
As the time passes, more and more people are starting to invest in rental real estate market. It is a lower risk and it offers a much better returns rate. It is a common situation that an individual wants to invest in rental real estate, but doesn’t know where and how. That is the main reason why you should do your research, make a plan and think about it once more. You will need to figure out a way to get the best results. Or, you can even get some help with deciding from professional advisors. It is really your choice.
What are the next steps after you invest in rental real estate?
It might be a good idea to invest some more after just obtaining a property. This can be a huge factor when you start renting it. You don’t need to spend all of your money, but making small changes here and there can create a much better picture of the property itself. Also, its value can increase more than you think. And that is the main goal! It will assure better return rate and increase your income.
Figure 4 Making small changes can increase the value of your property. Alt. Image of a kitchen.
Pay attention to the details
Small details can make a huge difference. Changing the layout of let’s say one whole kitchen can cost you a lot of money, but there are a few decorating tricks that you should use. Repainting the walls and installing a new air-conditioning system can make your property much better looking. Add some new furniture. Do your research, and try to find the best match. Make sure you don’t overstep your budget. Stay focused, and remember that the main goal after you invest in rental real estate is to earn as much money as possible – not to spend it all.