The investing industry has taken a hit in recent years due to fluctuations in marketable securities. Many investors have reported losses in 401(k) and other portfolios. The risk factor with monetary investments is never totally removed for new or experienced investors. A person who is wondering is rental property a good investment can determine the answer by using comparable data. Investing money into rental homes can be a lucrative strategy.
What Makes a Great Rental Investment
The markets in the housing industry have stabilized in many parts of the country. All people share the common need of housing. People who cannot afford to buy often rent. This provides one of the strongest opportunities for investors who depend on rental income. What makes a rental property great can be broken down into segments. These can be classified as rental income, location and property management.
1. Rental Income
A positive cash flow is essential for ensuring a return on your investment. Homes that are rented can generate a monthly or lifetime stream of income for a person who owns the property. The smallest increase in monthly rent charged to tenants can improve the bottom line for any investor. The different ways that investment income can pay off for property investors always revolves around the source of rental income generated.
Properties can under-perform, stay the same or over-perform. What can help influence the success ratios of a home is its location. Looks can be deceiving when it comes to homes and most people place location at the top of the list when researching the rental market. A home can be positioned inside an area that is known for long-term vacancies. This can decrease the value of the property and eliminate the positive cash flow that a property in a better location could feature. Owning property in a fast-paced environment with an above average location can work wonders.
3. Property Management
All rental properties that produce cash flow on a monthly basis have one thing in common. These properties are expertly managed to keep continuous dollars flowing into the company or individual who owns the property. Some properties that under-perform are likely due to the fact that there is little to no management. The day to day responsibilities that are completed by a good property management company are what can raise the ROI for an investor.
What is Better: Long or Short-Term Leases
Because homes for rent require renters, getting a steady source of income is essential to the overall profits generated. A shorter lease period is generally not what the average investors hopes for when investing into a rental home. The leases that are a year or more often provide the most solid returns. A good property management company can help to grown an investment between 12 and 25 percent or higher each year. If you're interesting in investing into a property, complete the signup for right on this page. The programs that are available are setup to assist new or experienced real estate investors.