One way to invest in your future is to purchase a rental property. Rental properties are a great way in which an individual can invest in their financial future. Consider this. If you own a rental property and can pay the mortgage off quickly, you will have a property that can provide you with stable income for years to come. When you tire of the rental property, choose to sell to have quick cash in hand. Of course, owning a rental property is a lot of work but if you choose the right property type, you will easily be able to earn money that can provide quality savings for retirement or just extra cash to have on hand when you need it most.
But how do you find the right rental property? There are several factors that must be considered. Read on below to see just what you should think about when considering a property purchase to be used as a rental building.
Essentially, there are three rental property types; commercial, residential and vacation. With each property type, the earning potential will vary along with the amount of work to upkeep the property. Take for example a commercial property. You can own a huge warehouse and earn a great deal of cash with minimal upkeep in an industrial setting. Or, you can choose to own a small building and rent to a boutique or art dealer, earning a nice check each month.
With residential rental properties, you will be making a set amount each month. You will need to upkeep the property and be contacted by the home owner often, in many cases, due to the need for repairs or any other issues.
A vacation property is an option that can produce a great deal of money is the tourism market is there. For example, if you have a cabin or vacation home located on the water or in a park like setting, you can rent out the facility year round. A vacation rental property will provide you with a nightly payment instead of monthly like a residential property. This means the potential to make money is vast and you have the option to pay off the property quicker due to this potential.
Consider Your Initial Investment
How much do you have to invest? Can you afford the monthly payment for the property if you do not have a renter? The rental property business is fickle and you need to be able to handle the payment of the property if you lose your renter. Consider your initial investment amount and how much your monthly payment will be for the property before considering your property type.
Look at the Market
Take a look at the local market. Is there a need for commercial spaces or are residential properties in high demand? Perhaps you live in a touristy area where a vacation spot would be the most lucrative. All of these factors must be considered so that you make the right decision for your next or first rental property.
Speak with a realtor to learn more about the rental landscape and what areas seem to be the most lucrative presently. A realtor will be able to provide quality information to point you in the right direction for a rental property.