How many of you would like to get rich and retire young? Well, all I guess. Real estate is a profitable business, which can help you hit this target. However, like any other investment, investing in rental property involves a certain amount of risk. Nevertheless, if you stay cautious and follow some strategic plans, you can be sure that your investment is in safe hands. Read ahead, to know how investing in a rental property can help you make money.
Locate a property in your residential area
Remember, time is money so, the closer it is, the better. Buying an investment property near to your place has some added advantages. First, you are well acquainted with the entire area, so you will have better understanding of how the market works, where you live. Since you have a clear knowledge of what is good and bad in your area, you can easily avoid buying bad investment property. Most importantly, you won’t have to travel far if any problem arises in the property. You can reach the spot and solve the matter quite fast.
Strive to buy multifamily properties
Make sure you invest in property with multiple units. The more units on the property, it’s better. With multiple units you can pay less per unit and get more “inventory” to sell. It’s certainly more profitable and less risky than single unit properties. This is because if you buy a house with two units, you will certainly earn more than having a single family home and if one tenant leaves, it wont matter much as you have still have one more unit making you money.
Look for a safe investment
Make sure the property you are investing in requires least repairs and is in quite a healthy condition. A property, requiring frequent repairs can leave you with least profit. Therefore, before buying the property, make it a point that you inspect it well and took a second opinion from an expert in this regard.
Be certain that you can make a down payment of at least 20 % of the total payment. It will help you ensure a safe investment that makes you money. It will not only help you making affordable payments, when your investment property is unoccupied, but also help you pay less on interest to the bank.
Last but no the least, your initial offer to the seller should be 15-30% lower than the price of the investment property. Make sure you don’t overpay in any way.
Repeat the aforementioned steps and buy one house every year. If you can mange to earn $500 a month for every house, soon you will pave your way to financial freedom.