When people look for a good starting point to venture into real estate, most turn to invest in rental properties. This is because rental properties offer both a good cash flow and also allow one to generate value from price appreciation at the same time. However, while rental properties may be a lucrative method of investing in real estate, it requires one to have good knowledge of the real estate market.
The higher the risk of a venture, the higher the reward. The same holds true for real estate investment. As such, it is imperative to be equipped with the right knowledge before you dive headfirst into real estate investment. One good way to learn about the real estate market is through reading real estate blogs as well as researching in general about the real estate market. Read on to learn more about what you need to know before starting to invest in rental properties in 2022.
Rental Properties
Rental property can be defined as a commercial or residential property that is rented or leased to a tenant over an agreed period of time. The duration of rental ranges from short-term ones that span just a few days, usually for vacation, to long-term ones that go beyond a year.
Some examples of rental properties are duplexes, triplexes, quadplexes, single-family homes, multifamily apartment complexes, office space, retail space, multipurpose space, as well as industrial spaces such as warehouses.
As you may have noticed, some of these rental properties are less expensive, making them easily accessible to beginners.
Choice of Investment Property
One factor that will make or break your real estate investment is the choice of the rental property. Many beginners make the mistake of limiting their choices to properties that can be found just minutes away from their place of residence.
If you live in an area with an expensive real estate market, rental properties are not exactly the best choice for supporting a positive cash flow.
Factors for Determining Investment Choice
One of the best ways to determine whether a property is suitable for investing in is through filtering. Some of the factors that you should filter for include:
- Demand. Look up the area of the property you are interested in and find out if there is a high demand for properties. It is highly recommended to look for areas with low vacancy rates. After all, you don’t want to end up holding the bag with no one to rent the property to.
- Average rental income. Figure out a range of how much your rental property will generate you and determine if it will support your investment goal.
- Job growth. Employment rates in the area can give a good indication of the health of the real estate market.
Finding the Right Property
If you are looking to purchase reasonably priced properties to invest in, then this property finder might be able to help.
