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How to Get the Most Out of Rental Income

Real estate investing has rapidly grown over the years with more people choosing to buy real estate to either flip for a profit or rent out for a passive income. However, many people who are new to this type of investing may not be fully aware of how to make the most of their purchases. If you want to maximize your profits from real estate investments, the following ideas can help you think more creatively.

Allow Pets

Many landlords miss out on tenants because they’re more concerned about the damages pets can do and take the easy way out of dealing with it by not allowing pets. If you want to attract a larger pool of potential tenants, allowing pets, even with some reasonable limitations, can do that for you. Be sure to collect a pet security deposit to cover any damages that may occur. This type of deposit is often nonrefundable, but tenants are more than happy to pay if they can get a nice living environment for themselves and their fur babies. This is typically around $250. It’s also possible to charge an extra $25-50 per month for pet rent if you’re still concerned.

Rent for Shorter Terms

Not everyone is looking for a long-term rental to spend a year or more. Some people travel for work, while others may just want a place to rent for a long getaway. Offering short-term contracts can open up your tenant pool significantly. Some renters prefer shorter six-month leases, while others would rather rent month to month so they can move quickly if needed. Think about the needs of your target audience and decide whether these shorter-term rentals are a better option for your rental property.

Furnish the Property

This is especially beneficial if you are considering short-term leasing, such as for business people who may be staying for a contract period. Some businesses will even rent properties with furnishings and move various business people in and out as their contracts dictate. If your property is located close to a college, providing furnishings can make your rentals more appealing to students who may be looking for alternatives to on-campus housing. There are many reasons individuals may be looking for furnished rentals that provide most of what they need. All they need to do is bring themselves, their clothes, and personal effects. Before you furnish any apartments, though, take a look at other local furnished apartments so you can remain competitive. While furnishing your properties is costly at first, it can pay off in the long run.

Add Extra Amenities

People are always looking for things that make a rental property stand out. Consider adding some extra amenities to make your rentals more attractive than the alternatives. Alarm systems, for instance, are an excellent addition, especially in more urban properties, to not only give your tenants greater peace of mind but to show them you are putting in the extra effort to make their stay in your property more enjoyable.

When investing in rental properties, it’s crucial to find the best ways to ensure a steady flow of income. Thinking outside the box is essential to your success. When you consider these ideas and come up with a few of your own, you can make your rental property truly stand out.

Real Estate Investing Tips For Beginners

You can make money in real estate by investing in four different ways: By real estate appreciation on properties you own, via cash flow from rentals, from commissions if you are a real estate agent or broker, and by investing in services offered in commercial buildings such as apartments complexes or businesses you have an interest in.

The Pros and Cons of Real Estate Investing

Buying property is one of the most lucrative aspects of real estate investing. However, there are risks involved. The risk is lower than the stock market and you could have steady cash flow. You also earn tax breaks and benefit from long-term ventures. However, the cons include:

  • Returns are not as high as those in the stock market.
  • You need quite a bit of start-up cash.
  • Properties are not easily liquidated.
  • If you invest in apartment complexes, maintenance and dealing with tenants are often challenges.

Tips for Beginner Real Estate Investors

Before you even start with your first investment, you should do thorough research on investing. These tips are just some of the factors you should know before you plunk down your hard-earned money.

1. Know and Understand the Costs Involved in Any Type of Real Estate Investing

Regardless of how you decide to invest in real estate, know what costs are involved. If you are investing in REITs, know if and what fees you need to pay. If you buy a property to flip it, make sure you know how much you will need to fix that property up so that you can get the best return on the property. For services, you should know what licenses your city, county and state might require. And, with any type of real estate investment, know how your investments will affect your taxes.

2. Determine How You Want to Invest

How you want to invest means you select certain property types. If you want to become a landlord, you can choose apartment complexes, commercial properties, or you can buy several single family homes to rent out.

3. Know Your Location

It’s easy to decide to buy a less expensive home in a less-than-stellar neighborhood. But, you have to take several things into consideration, including the value of the property. If you have to put $60,000 into a property to get it ready to rent or sell, can you get enough to make a profit? If you paid $25,000 for a house and put $60,000 in it, but you can only sell it for $75,000, you’re going to lose out. Furthermore, if you can only rent it for $500 per month, but your mortgage payment is $550, you’ll end up losing out instead of creating an income.

4. Risk Management

As with any business, investing in real estate comes with legal risk because you are dealing with people. Setting up a company helps you mitigate some of that risk. If you set up a corporation and have the properties buy the corporation, those who may want to sue you cannot come after your personal assets as long as you set the corporation up properly. You should always discuss risk mitigation with a business attorney. A company also helps you control and manage your finances since you cannot co-mingle the money with your personal money.

Plan to start out small. While there is a sharp learning curve when going into real estate investments, it doesn’t have to be intimidating. When you start out small and do your research, you’ll be more likely to succeed.

Start Real Estate Investing in Arizona with These 5 Tips

With all the rage over cryptocurrency and investing in stocks, many young adults are still using real estate investing as their portfolio’s strength. According to a recent survey, 36% of millennials prefer real estate investing as their main strategy to accumulate wealth. But young adults aren’t the only ones using this method – most Americans are, too. In fact, 31% from all backgrounds are harnessing the wealth building power of real estate investment.

When it comes to investing, real estate is a smart way to diversify your portfolio. However, there are many investors who think this is off-limits to them due to their lack of knowledge. It’s time to change that. Read on to learn how you can start investing in Arizona real estate.

1. What is Your Situation?

Where do you see yourself? Where do you want to go? Who do you want to become? What are your goals? Your career path? The answers to these questions will help you develop an investing strategy for the future, along with the best type of loan for your real estate investment.

2. Gain Leverage

In general, most people believe the only way to purchase real estate is with a 30 year fixed mortgage from a traditional lender. However, depending on your lifestyle, there are other loans available. Taking the time to educate yourself about the different options available to finance a home or other real estate property will shift your entire belief system and you’ll see that you have access to funds through channels you never knew existed, such as adjustable rate mortgages and interest-only mortgages.

3. Compare Mortgage Loans

The loan you choose is a well-planned product, and the product you want to select is the one with the lowest interest rate and the highest stability. Use a mortgage calculator to help you do the math and compare different mortgage loan products.

4. Gather a Strong Team

You can’t and shouldn’t go this alone. And you should be careful about who you decide to place on your team. Having a financial advisor is the first support system you’ll need. Next is an experienced real estate agent. Both professionals will ask the right questions and guide you along the right path to success. Tip: Keep an ongoing relationship with your mortage loan officer as he or she will be able to give you information regarding the market and when it might be a good time to refinance.

5. You Need to Plan for the Future

When thinking about the future, consider that rental properties provide both investment appreciation and cashflow, but they may not provide them at the same time. For this reason, it’s important to determine why you’re investing in the property. Do you want cash flow now and in the future, or are you looking to make a profit once the property’s value goes up and you sell? These are important details to know before investing in a property in Arizona and will determine what property you choose to purchase.