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Is Rental Investment a Good Option for you?


In many areas of the country, rental properties are in some much demand that rents are once again on the rise, causing many investors to sit up and take notice. If you have considered getting into real estate investment, rental investing just might be the option you have been looking for.

For investors who put their money into rentals, the advantages can be significant. One of those benefits is the ability to turn around profits much faster than was possible in the past. Also, the return that can be achieved on rental properties is typically much better than the prospective returns available on other investments. For investors who are tired of the constant fluctuations of the stock market, this can certainly be good news.

Traditionally, monthly mortgage payments on rental properties were merely subsidized with the rents received. The true profit realized on a rental investment was the appreciation in price the investor was able to receive over time. Today, that situation has completely changed. Many investors are now able to purchase a rental property with a 25% down payment, finance the remainder and then collect the rent each month to cover not only the mortgage payment, but also the taxes and insurance. In many cases, even after covering those expenses they can still have money left over from the rental receipts each month.

An increasing number of investors are viewing their rental properties as an investment that can generate income monthly. This makes it possible to begin achieving profit margins practically instantly. As the market continues to deteriorate, it is possible to achieve even higher profit margins.

There are several factors contributing to this phenomenon. One is the fact that interest rates remain low, meaning that investors are able to take advantage of record low monthly mortgage payments. At the same time, renters are not moving to snatch up deals as first time home buyers. Many consumers have looked at the housing market and determined that the cost of owning a home overall simply isn't worth it for them. Gone are the days when people buy a home and stay in it for the next 30 years. Renting simply makes much more sense for many people today.

Once you decide that rental investing is the right move for you, it is important to know what to look for when searching for rental properties as well as tenants. While there are many advantages to owning rentals, the reality is that you need to have the right tenants to make this opportunity profitable. Before making any real estate purchase, you need to consider whether you have the time and the resources to actually be a landlord. You need to recognize that you will need to work at it to ensure your rents are paid on time and you will also need to be able to deal with the situation if you have a tenant that doesn't pay. That means you must be able to effectively evict tenants if the situation calls for it. At the same time, you must recognize that you will be responsible for maintaining the property.

Research is also crucial in rental investments. Spend some time finding out what the going rents are in your local area. You also need to find out what the average vacancy rate is and how much it is going to cost you to finance. Also, do not overlook the other costs associated with actually owning a property, such as maintenance, insurance and taxes.

When searching for possible rental investment options, remember that location can be critical. Renters like to be near public transportation, good schools and other amenities just as much as someone who is looking to buy a primary residence. In addition, purchasing properties near military bases and colleges can also be a good idea. Consider the crime rate of the local area. Renters want to ensure the area they are living in is safe; particularly if they have children.

Overall, right now is one of the best times to become a landlord in a long time. Around the nation, rental prices are expected to increase by 5% this year alone and potentially another 5% over the course of the next year. This trend is even more pronounced in certain areas of the country, particularly in Florida and Southern California. The simple fact is that many consumers have made the decision they are better off renting for a variety of reasons. That combined with record low interest rates and housing prices has created an extremely attractive opportunity for prospective investors and landlords.


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