Investing in a rental property means obtaining a house or a commercial space for the purpose of generating revenue in the form of rent. Without a doubt, rental property investment is a great way to generate monthly cash flow for beginners. But, on the flip side, many investors find it very challenging to maintain due to miscellaneous expenses like renovation works and taxes, property market gaps, and property management. In contradiction of how books and conventional wisdom try to tell, investing in real estate for a passive income is not easy, in fact, it is one of the most time-consuming forms of real estate investments.
Is rental property a good investment
Should it be a good investment to buy a rental property? Mostly yes. Real estate is a capital making machine that has been there for centuries. The rather common method of the same kind of investment is “buy and hold” or more known as buying and renting out to pay down the mortgage every month. Basically, buy and hold investors build wealth with some cash for the initial installment of any type of property then recompense monthly payments from their rental incomes. One of the advantages is that during the time, principal balance of the mortgage payment is decreasing and it’s increasing the equity. It generates income while it offers tax benefits and growing a capital from price appreciation for years.
Buying rental property is one of very few practical investment in a sense you can live in or opt for renting to produce passive income. You can also sell the property at higher price than your investment to make a larger income, if you make a correct decision and analysis. To get the optimal result, one needs to get priorities checked and decide how much time to devote to the endeavor and decide whether he can solve the problems on own. One must know all the risks associated to rental property and know other ways on how to monetize the rental property. There is a lot more than just mortgage expenses to take into an account. It is important to know the two types of appreciation- rental and property value, and how it affects the rental property investment.
Turnkey rental properties
Turnkey rental properties is an approach to buy a fully setup property that is ready to live in or rent out. This is a highly appealing method perfect for investors who prefer hands off property management and to enjoy the investment returns without obligations to a various sort of work. A third party property management company, like Texture Properties will be wholly responsible for the property management that the owner no need to be involved in anything from renovations to market research. The Property Management company will be resolving the tenants’ issue, maintenance job and even collecting the rentals on time. This approach could pose many advantages besides getting the business done smoothly for the first time investors who might not be able to see the profitability of their property.
Investing in real estate rentals is not a get rich quick arrangement, it requires time and knowledge of certain deals. As we analyze the deals carefully, and ensure to perfect it, the real estate becomes a solid long-lasting business. Good education in the field and good source of information up to date would save from making a critical mistake. Bear in mind, it is hard to operate solo, therefore building a network or finding a partner is a great way to jump start. Learning from the experienced ones or finding a mentor is one of the vital steps you can take in gathering information. Get engaged into community portals or groups of buying rental property in Dubai to gain more elaborated information.
First step to take upon purchasing a property for rental purpose is to simplify the process of generate a second income, which otherwise can eat up a lot of time for doing things that’s not worthwhile to devote. Rental property company will do all the heavy lifting in such to avoid spending further expenses or precious times. The property management company will guide you from buying a rental house to renovate and manage and lastly how to deal with tenants and contracts properly by certain strategies.
Next step is to do plenty of market research to find out the suitable area or community to invest in- that is the best within budget and best yield of return assured. However, most of good property management companies already know the best spots of the market with their extensive research and expertise. These companies should advice when and where to invest in which market for more sustainable investments. It immediately saves client’s plentifully money as well as energy from finding properties that are well located and physically sound in a market where development is heading.
Property management companies purchase properties in bulk including REOs (a property belongs to a bank when it fails to be repaid or a sale) with good prices. They close deals quickly with cash and usually better at pricing. Also they have their own renovation team perhaps do the maintenance costs less than regular costs.
Lastly, to manage multiple properties in a proper way, one need to hire professionals such as brokers, contractors, accountants, loan officers, attorneys, etc. to name a few, which is then difficult for an investor to do on his own. Instead it, a property management providers have on-going associations with these professionals, which ensures that property is ran in the most sufficient way. Besides, all the advantageous assistance property companies could provide to a client, one last important note is that they can help the client with financing as well, exploiting good relations with financial institutes as well as Banks.
Final Word
Being realistic in the expectations is important. A rental property isn’t going to harvest a high yield and monthly paychecks right away, especially if it’s the wrong property in a less appealing community could be a catastrophic mistake. Therefore, it’s best to always consult a professional if you are a first-time investor in the area. If you are interested in rental income, Texture Properties is happy to consult you in any manner with expertise.