If you’re looking for ways to supplement your primary income, you’ve likely considered investing in real estate. While owning multiple properties can seem intimidating, real estate properties are some of the most stable and lucrative investments out there.
Real estate properties are appreciating assets, meaning that over time (and with proper maintenance) their value only increases. Rather than invest in unpredictable stocks, you can make an investment with guaranteed cash flow. Even better–the money that you make from rentals is passive income. This means that your properties will make you money without much effort on your part at all.
If your goal is to make money, the value of real estate is clear. However, there may be some factors holding you back from taking the plunge and diversifying your portfolio. Keep reading for a breakdown of some common concerns about real estate investments and solutions that can help you overcome them.
If you’re just getting into real estate, you may be concerned about making enough money back from rentals to cover your property costs and still turn a profit. To ensure that your investment is successful, you just need to plan your rental strategy well.
For instance, you may want to start small and make your first real estate investment a vacation property. This way, you can enjoy the flexibility and higher income of short-term rentals to get a feel for the process. With short-term rentals, you can adjust your nightly rates at your discretion and turn a higher monthly profit. This option gives you a quick, significant return on your investment that will prove how lucrative real estate can be without having to worry much about long-term tenants.
If you are a seasoned investor and you’re feeling discouraged to expand your portfolio due to financial obstacles, there are plenty of resources to help you make that next big step. Rather than purchase more small rentals with your own available funds, you can seek out a commercial loan program to finance an apartment building purchase. These programs can help you differentiate your commercial investments from your personal finances while allowing you to remain the sole investor in your new venture.
For some, maintenance responsibilities and expenses could prevent them from making a real estate investment. Luckily, maintenance can be easily handled without much involvement from the owner at all.
In fact, many investors keep their distance from their rental properties. In their absence, they hire professionals to maintain and manage the day-to-day operations of their rentals. Some landlords may choose to maintain and manage their own properties, but they likely do so to spare extra costs and develop positive relationships with their tenants. If you make sure to budget for assistance when you develop your rental plan, you shouldn’t have to worry.
Further, there are plenty of tax incentives for real estate investors. Plenty of maintenance expenses are deductible, which means that some of the concerning maintenance costs will equal out anyway.
Another concern that prospective investors have is that their properties may not make enough money due to vacancies or market fluctuations. Luckily, these issues can be resolved through good marketing.
The best way to ensure that your property makes enough money is to keep it booked with good, paying tenants. Vacancies can cause dry periods during which you don’t turn a profit and have to pay the property fees yourself. To avoid this, research your local market and compare your rental plan to your competitors’ operations.
With this knowledge, you can market your property as a superior option to other local rentals. Whether you can boast lower rates, more amenities, better spaces, or kinder service, proper marketing will ensure that you keep your units full and outperform your competitors.
If you have ever thought about investing in real estate and didn’t go through with it, consider these solutions and get in while the market is hot.