Maybe you’ve thought about investing in real estate by way of owning a rental property but shy away from it… This is a commonality when it comes to investing, in general, simply because people are intimidated by it. The world of real estate investing is not as scary as people tend to make it out be, but because people don’t know too much about it, they shy away from it.
Yes, to own a rental property it will, in most cases, require you to secure proper financing, unless you just have hundreds of thousands of dollars saved up. But surprisingly enough, securing financing is the part that intimidates people the most, when really, that’s the easy part. The hard parts come after securing financing and finding a home… Managing your property in a way that actually makes money is the hard part.
How is this the hard part, you ask?
It seems like once you find a home and rent it out, money would just fall into your lap, right? That’s what it seems like but there are several factors that can indeed cause you to lose money with your rental property. When investing in a rental property, it will, of course, involve trial and error, and you’re going to make mistakes along the way, but if there’s anything you can do to get it right the first time, that’s what you need to do.
If this will be your first time buying a rental property, take a look at some of the top lucrative ways to profit from your rental property.
Ways to You Can Profit From Your Rental Property
Find Good, Trustworthy Tenants
Any seasoned landlord will tell you that one of the secrets to profiting off your rental property is to find good, trustworthy tenants.
For one, good tenants mean that you will have a steady source of income coming in by way of steady monthly rent payments. If this is your first time investing in rental properties you want to do your due diligence to find the right tenants to rent your property to. Not only will this give you peace of mind, but because you’ll be getting monthly rent payments, it’ll be easier to maintain a comfortable lifestyle and even help you to cut back on your own personal monthly costs to generate even more income.
You’ll need to conduct a thorough background and credit check, reference check of previous landlords, and verify their income. Just to give yourself peace of mind, talk to them to get a feel of the type of person they are. You want to rent to people who will take care of your property as though it was their own; really just get to know them on a personal level. Throughout the entire process, fairness should be at the center of your decision-making process. If a prospective tenant feels that you’ve discriminated against them in any way, they could file a complaint with HUD, and that’s the last thing you want.
Utilize Your Property in the Most Efficient Way Possible
So, people buy rental properties to generate additional income, right? But in acquiring a rental property, you have to determine which way would be the best way to earn from your property the most.
You have the option to rent to long-term tenants, like families wanting to live in your property for years. This is a much safer option and will guarantee stable and steady income every month. But, on the other hand, you could utilize your property as a short-term rental and list it on sites like Airbnb or Vrbo, and rent it out hotel-style and charge a price per night. This also has the potential to generate more income per month.
You have to consider where you live, the amenities in your home, and the proximity of your home to local attractions. This will help you better determine if your property will profit more as a short-term vacation rental or more of a long-term rental.
Consider the Location of Your Rental
The location of your rental is actually going to touch back on how to utilize your property in the best way. There are, of course, certain destinations more known for being vacation destinations than others. Places like California, Florida, and Tennessee are great destinations to buy a rental property and set it up as a vacation rental. Why? Because guests will get to enjoy coastal living as well as country living, which are two lucrative living spaces that people pay to experience, especially when they don’t live like that.
On top of that, the cost of living in certain areas are more expensive than others. For instance, the cost of living in California is much more expensive than it is in Tennesee. So whether you choose to profit as a short-term rental or a long-term rental, you will price your listing not only based on the amenities of your property but also on what it costs to live in your area as well.