Investment In Rental Property - Are Rentals The Way To Make Money?

Drag to rearrange sections
Rich Text Content

An investment in rental property can be a good way to make passive income. Make sure you go into this venture well informed. It's not enough to just buy a property and think people are going to automatically be knocking at the door to rent it. You have to understand the rental property market in the area, the attitude of prospective tenants and the condition of the property for rent. Being a landlord is hard work. If you're up for it, it can be very rewarding.

Making an investment in rental property is not the same situation as buying your primary residence. You may think about different qualities when considering a rental property. Are you looking for a property that will be for a family or for several different tenants? What type of tenants do you want to have in your property? If you buy rental property near a college town you might get plenty of tenants but they may not be as long term as a family in a different community. You also need to consider how much rent the market will bear. If you make an investment in a rental property and can't get enough rent to make a profit, you may regret it.

A successful investment in rental property means keeping your property rented. You have to actively seek tenants and then you must do whatever it takes to keep those tenants happy. This means maintaining the property, making repairs quickly, and responding to your tenants when they need something.

Sometimes it's easier to have property managers take the responsibility of managing the rental property if you are not close enough or do not have the time. This will eat away at some of your investment profit but in the long run, it may be worth it. Property management companies can perform all the tasks associated with rental property investment such as recruiting and screening tenants, collecting rent, and managing repairs. For many people, the fee is well worth it.


Are you considering investing in rental properties? For a beginner, investing in rental properties may seem like a daunting task. However, with these simple tips, you'll be on your way in no time!

Put Yourself In The Right Frame Of Mind

What does putting yourself in the right frame of mind mean? First, realize that investing in rental properties is business. You must put aside the conceptions that an investment property must be beautiful, have excellent curb appeal, exciting amenities, and a wonderful floor plan. A beginner may lose money or miss out on making real money because the income property doesn't have those things.

You must believe that beauty is only skin deep and instead look at the property's financial performance.

Set Meaningful Goals

Just by answering these few questions, you can set realistic and meaningful goals that will help you successfully invest in rental properties.

  • Do you have the available funds to realistically invest in an income property?
  • Do you expect a return on investment immediately?
  • Are you expecting your return on investment when you resell?
  • Do you plan to keep the property long term, or do you plan on reselling right away?
  • How much of your own time, effort and money can you afford to contribute to running the property?

Do Market Research

As a beginner in investing in rental properties, you probably don't know much about the prices for rentals in your local market. Before actually investing in a property, take some time to learn as much as you can about local income property values, rental rates, and occupancy rates. The more you know, the better equipped you are to see a property for what it is: a good deal or a bad one. The following resources will get you on your way.

  • A local appraiser
  • The county tax assessor
  • A qualified real estate agent
  • A local property management company

Learn How To Run Your Own Numbers

There are several key financial measures that are used to evaluate a property. Once you know what income, expenses, cash flow and rate of return are, you will be in a better position to make good investment decisions.

There are several software programs for this specific purpose. Find one that's right for you and you'll be amazed how much you can learn by running your own numbers and viewing the reports.

Only Work With A Licensed Real Estate Agent

Once you're ready to start investing in rental properties, contact a local, licensed real estate agent. Your agent can inform you of local market conditions and recommend properties that meet your particular investing goals.

Make it clear to your agent that you want to invest in rental properties. Your agent should be able to present you with concise data to make smart investment decisions.


Assume The Worst 

There are a lot of very greedy people involved in a property that will take your money off you quicker than you can blink and give you nothing in return. In any industry where you are talking about huge amounts of money being spent on deals, you are going to get the vultures who hang around trying to bleed you dry. Be on your guard and don't trust anyone blindly, make people work to gain your trust.

Learn How To Do The Maths 

It doesn't matter if you were useless at maths in high school. if you want to succeed as a property investor or developer, you need to learn a little about sums now. Working out things like rental yield and return on investment are going to be essential to your success.

Get Yourself A Mentor 

Investing in rental properties for beginners can be a nightmare if you want to progress quicker and reduce the mistakes you make, then you will need to get yourself a mentor. This doesn't have to be someone that you pay lots of money to, it can be someone you connect with on a property forum whose free advice you follow. A website can also act as a mentor if it has valuable advice to help you succeed.

Keep these tips in mind and you'll be on your way to being a successful investor!

Drag to rearrange sections
Rich Text Content

Page Comments