Are you looking to build long-term wealth and elevate your financial future? Rental properties may be the right investment for you my friend. Not only can it provide you with a steady stream of passive income every month, but over time, it can provide you with tons of leverage and equity which can help you buy and invest more.
Now, before you start scouring the market for a property, there are a few things you need to know. First, location is everything. You want to look for properties in at least decently desirable neighborhoods with access to public transportation, shopping and even restaurants. But what happens when the only affordable options are in neighborhoods with higher crime rates and not-so-great schools? It’s important to know which blocks are the “hottest” so you can stay away from them as best as you can. There are good parts to every city, so do your homework and make your decisions based on that.
Once you’ve scoped out your desired areas, it’s time to crunch the numbers. Sure, it’s not the sexiest part of investing, but it’s crucial to ensure the property is financially viable. You’ll want to estimate potential rental income, property taxes, maintenance costs, and even unexpected expenses like repairs or emergencies. Yes, this sounds like a ton of work, but my not-so-secret sauce is using a realtor! A good realtor will gladly help you gather the bulk of the information you need. From estimated rents, property information, what repairs/renovations actually effect potential rent – this is a great way to speed up your evaluation time and make more sound decisions.
It’s also key to know that with the right financing and strategy, you can make your rental property goals a reality. Shop around for the best mortgage rates and consider working with a lender who specializes in rental property financing. Sometimes getting a fix and flip loan is the best route so you can rehab a property and refinance out of it once the property is updated. You could even go in with friends or take out a home equity loan to get the ball rolling.
Now, managing a rental property can be a lot of work. But don’t worry, there are options to make it easier. You can hire a property management company to handle all the nitty-gritty details like finding tenants, collecting rent, and taking care of maintenance and repairs. Or, if you’re feeling ambitious, you can manage the property yourself and show off your DIY skills. Again, I’ll give an honorable mention to realtors being able to help you find good tenants also.
My last tip, stay informed! Real estate investing is always changing, so it’s important to stay up-to-date on market trends, laws, and best practices. Attend conferences, join a real estate investment club (shameless plug haha), or follow your favorite real estate investors on social media to stay in the know. Success leaves clues and fortunately there are a ton of great resources available via the internet to keep you educated.
Investing in rental properties is truly a great way to earn lots of income over time and the advantages from collecting rent and building equity are endless. What are you waiting for?!
