The Guide That Makes Investing in Real Estate Rental Properties Simple
Americans are spending nearly 30 percent of their income on rent. That’s a lot of passive income ready to be made by a shrewd investor! Are you considering tapping into the housing market yourself?
Real estate rental properties are an excellent way to diversify your portfolio. Property development and rentals can create a steady source of passive income. Best of all, you can reap the rewards with little effort once you’ve invested in your properties.
Wondering how to get started? Keep reading for our fuss-free guide that lays out how to get your start in this exciting market.
Starting Out In The Real Estate Rental Market
When working on portfolio diversification, rentals are a great way to expand. But you’ll need capital to get started. Luckily you have options.
If your investment portfolio leaves you with liquid assets, you can use these to fund a down payment.
If you already own existing properties, you can take out a home equity line of credit (HELOC). With HELOCs, you take out a line of credit against your home.
You can choose from a variable or fixed interest HELOC. You can expect a 10 to 15 year draw period with HELOCs.
You can use a hard money loan if you’re eyeing investment properties that you can quickly fix up. If you can find a property for a low price, you could use a very small downpayment or none at all to secure the place.
One thing to note is that these loans are for shorter periods of time and charge higher interest.
But if you can fix up a house and sell it quickly for profit, consider this option. It’s a great way to get into the real estate market.
Funding Your Next Endeavors
Investing in property provides a lucrative stream of income for future investments. When you begin to rent out your unit(s), you’ll be able to rely on a steady source of income.
Often, a helpful rule of thumb is to create an account for your rental payments. Save for a year so that you have a rainy day fund for emergencies or repairs.
After that point, when you’ve built up enough of a buffer, you can begin to leverage your income. Use this to income for investments, or directly invest in new properties.
Once you’ve reached this point, you may want to look into property development as well.
Aside from purchasing an already existing property, consider development options. You may want to partner with other investors (see Lincoln Frost for what to look for in an Australian partner) in order to mitigate risk.
Be aware, though, that property developers face a need for substantial upfront capital. You may want to pair up with professionals, such as those at Hilltop.
They can advise you if you’ve done your research yet don’t have access to enough capital.
Expand Your Portfolio With Property
Investing in the real estate rental property market is a great way to diversify. Start out small with HELOCs.
Or go bigger with development projects and partnerships. There are options to get started at every level.
Did you find this information helpful? Be sure to check out our other investment and lifestyle advice on the site!