It can be very profitable to invest in rental properties. However, you do have to know what you are doing if you want to be successful. Although rental properties can bring in very interesting returns, too many people still overlook them.
The first thing is to find something with a good return on investment. Real estate is an illiquid asset that requires you to minimize on your liquid assets. Try to make sure that the return rate you get is the same as what it was on your liquid assets. This means that you should find a true cash flow property, and not a money pit.
On a personal level, you need to have excellent people skills and be a skilled manager and negotiator. Then, you also need to ensure you are able to do repair work, or know the people who can do it for you. Lastly, you must hire a property inspector. Generally speaking, investing in property means you will become a landlord. This also means you need to learn how to vet potential renters and how to be a landlord. It cannot be stressed enough how important it is to have money to spend in order to make more money. It is almost impossible to make it in this world without having some money of your own. Now that the practicalities are behind you, you can start looking into locations. You can find out all sorts from the internet, local libraries and town board meetings. You must get to know the location as it is at present as well as looking into future development plans.
You may want to consider investing through a REIT (real estate investment rrust). This means you need less investing capital up front, but the returns are not as high either. Through a REIT, you basically invest in real estate corporations. This includes things such as shopping malls and industrial complexes. You can find the value of a REIT on the stock exchange and NASDAQ. Basically, when you invest in a REIT, you are working with a type of mutual fund that looks solely at real estate. Before you start, however, you need to think about a few things. Consider the key holdings’ economic conditions for starters. Also, you should look into how the REIT has performed historically. Also look into their future plans. Looking into the REIT’s manager and what their experience is. Last but not least, consider what the real estate market looks like and how this could affect how your REIT will perform.