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.
First, you need something with a good return. Real estate is an illiquid asset that require you to take money out of your liquid assets. What you should look for is to get the same or similar rate of return. This means that you should find a true cash flow property, and not a money pit.
Applying this to real estate investment, what you are looking for is not appreciation, but rather cash flow. Cash flow is what actually comes into your bank account from your rental properties after you have met your financial obligations. What you should do is leave your cash flow alone, and keep that as savings as much as possible. Plus, your cash flow can increase as rent prices go up over time. This is particularly true if your mortgage payments stay the same. The best cash flow is at least 20% of your overall income from the property. Spend some time using the internet to work out exactly how much your cash flow is.
In order to make a good real estate investment, these are the things you should be looking for. The ideal investment property is one that doesn’t require too much maintenance or management. Unfortunately, this can be quite difficult to achieve. You need to have the time available to actually find these properties. You need to research and analyze and look into the available options. Once you decide to start investing in real estate, you will probably want to get started straight away. As tempting as it may be to invest in the first thing that comes along, you really shouldn’t do that. The reality is that if you invest in a terrible property, then you will struggle to every see a return on investment and you are more likely to actually lose money.