5 tips to make money with real estate rentals

With interest rates and home prices at all-time lows, now is one of the best times to invest in rental property. Also, in many cities around the world rents are starting to rise. According to Reis, a real estate data firm, rents increased 3.7% in 2012. This is great news for real estate investors who benefit from both rising rental yields and rising property prices. the house that usually follows.

To help you take advantage of today’s real estate market, we’ve put together these top tips for making big money with real estate rentals.

#1 Location is key

As the old saying goes, successful real estate buying is all about “location, location, location.” When choosing where to buy, you should look for areas with a large number of prospective tenants. A large supply of tenants means your property will be vacant for shorter periods of time, you’ll be able to be more selective in your choice of tenants, and you’ll be able to command higher prices for your rental properties. This is why rural areas often generate poor real estate rentals. Before buying a rental property, also be sure to visit the neighborhood. If there are many vacant properties or houses for rent, this can depress the rent you will receive for your property. Also choose low-crime neighborhoods with the facilities that working families demand, such as schools, parks and shops.

#2 Use professional management

One of the most common complaints about becoming a homeowner is that people don’t want to have to spend weekends fixing toilets. However, if you use a professional management service, you never have to. As a real estate investor, you make money by selecting high-quality properties. Before buying your rental property, you should have taken management fees into account. Professional management means you can focus on the business of building your home buying portfolio.

#3 Earn your money when you shop

The time to make money renting out your home is when you buy, not when you sell. This means being selective about the properties you buy and making sure you buy them at a reasonable price. In the recent housing crash, many investors got burned because they were buying houses assuming it always goes up, so it didn’t matter what price they paid. When you buy a real estate rental, the rent you receive must cover all outgoing costs so that you can keep the property for as long as it is needed. If you do this, you won’t have to worry about temporary fluctuations in the Home Buyer’s market.

#4 Have access to capital

It is important that you be able to meet the mortgage payments on the rental property, even if it is vacant for an extended period of time. You should also be able to afford to make repairs to the property as needed. Having a revolving credit loan or up to six months of savings are two good ways to achieve this.

#5 Form a strategy

One of the biggest differences between highly successful homebuying investors and those who only get mediocre returns is having a strategy. Before you begin, decide how you want to make money from real estate investing and what types of properties you are going to invest in. For example, will you focus on buying low-cost homes and renovating them? Or will you only invest in new, low-maintenance apartments? Also understand what your exit strategy is for your real estate investments. Will you keep them indefinitely or do you have a time frame to sell your real estate investment? Knowing where you are going will make it much easier to choose the right real estate to buy.

With some of the lowest interest rates in recorded history and rising rental yields in many major cities, we are now experiencing a perfect environment to enter the real estate market. However, this opportunity will not last forever, so it is important to capitalize on it while it still exists.