How to make money investing in rental properties
Is it possible to make money investing in real estate? You see all those ads for courses that cost hundreds of dollars and claim to teach you how to make money investing in real estate. The truth is, a little research and insight can save you hundreds, if not thousands, when you invest in rental properties. If you have some money to invest, rental property is a great way to turn your money into a lifetime of income.
There are many advantages to investing in rental properties, but there are also some disadvantages. One advantage is that it is a long-term investment that has in the past given an annual rate of return of around nine or ten percent. This is comparable to the stock market, but with significantly less risk. Capital gains tax on any gain you make from your rental property is twenty-eight percent, which is less than most investment or employment income. One of the disadvantages of investing in rental properties is the cost of tenant repairs, and another is vacancies.
There are some tips to follow to maximize the return on your rental property investment. The first is to consider a month-to-month lease for your rental property. Most landlords prefer to rent for a fixed period of time, such as six months or a year. The advantages are fewer vacancies and more stability. There are also some disadvantages to having a longer lease time. One is that it takes much longer to get an unwanted tenant out because of the legal system. With a month-to-month lease, only a month’s notice is required for the tenant to move out. Certain groups of people, such as college students and workers who may be relocated among others, actually prefer a short-term month-to-month lease, and these groups will generally not sign an agreement for a long period of time.
A month-to-month lease can save you money on your real estate investment. This is because it is easier and faster to increase rent if maintenance and other costs increase. With a longer lease, you cannot increase the rent during that time period, even if your costs increase. With a month-to-month lease, if your costs go up, you only have to give the tenant a month’s notice before you can charge them more.
In summary, sometimes it is better to have a month-to-month lease with your rental property investment. The benefits far outweigh the costs, and some good tenants would prefer the shorter terms. The short time allows you to push out undesirable or non-paying tenants much faster so that good tenants can be found and moved in. This can save you quite a bit of money, repairs, and hassle. You invested in real estate to protect your money and make it grow, and a shorter lease period will be more bang for your buck.