Rental properties can make for a very lucrative investment. However, you do have to know what you are doing if you want to be successful. It is strange that so few people consider rental properties as an investment, even though the returns can be so high.
First, you need something with a good return. To invest in the illiquid asset that is real estate, you will have to take money out of your liquid assets. What you should look for is to get the same or similar rate of return. This means that you should find a true cash flow property, and not a money pit.
Investing in real estate, therefore, shouldn’t be about the appreciation, but rather about the cash flow. Your cash flow is how much you end up with at the end of the month after all your obligations have been met. You can save up your cash flow and see a really fantastic pot of money building up. As rent prices go up, your cash flow will rise too. This is particularly true if your mortgage payments stay the same. A good cash flow is at least 20% of the money you get in overall. There are some great online resources in terms of calculating your cash flow.
These are the things to look for in good real estate investments. The ideal property is one that doesn’t require too much maintenance or management. Unfortunately, this isn’t always as easy as it may seem. You need to be able to invest a lot of time in order to find these properties. You will need to take the time to analyze and research any and all options that come your way. Most of us who are ready to invest in real estate want to do so immediately. Even if you have been searching the market for a long time, you should never invest in a property that you are not sure about. Unfortunately, a poor investment decision in the world of real estate can be incredibly costly and it will be hard, if not impossible, to ever see a positive return.