When it comes to investing in real estate, there are a number of ways that purchasing property and renting it out to tenants can be used for supplementing income, and in turn, increasing wealth.
While doing so can in many ways seem somewhat “cut and dried,” there is really not a one-size-fits-all strategy for being a landlord. With that in mind, prior to becoming a real estate investor, it is important to determine what type of landlord you will be.
For example, in some cases, an investor may focus on purchasing properties in an area near a college or university. This strategy can produce a nice amount of income potential. One reason for this is because properties can essentially be rented by the room – which can increase your overall bottom line profit. In addition, while the units should be functional, there is no need to include a lot of high-end finishes such as granite countertops or expensive, top of the line flooring.
When focusing on this niche, there are some considerations to be aware of as well. For instance, the turnover will typically be higher, as students tend to move each year. The units may also require more maintenance, as students may not always be the most “responsible” tenants.
Another focus area for landlording could be executive rentals. Here, your properties would primarily be rented to business people or to those who are on location temporarily. While these properties may often cost more upfront (because they are typically more high-end), they can also command more in rent. This is because they can sometimes bring in double, or even triple, what the same amount of space would rent for in a regular rental situation.
Although you will generally have to rent these units furnished and with higher-end finishes and amenities, it can oftentimes only take half the year’s rental income to cover your expenses for the entire year.
Specializing in a particular property niche can often be a great way to obtain tenants more quickly. Doing so can help you to build up a name and a reputation over time – especially if you have multiple properties available.
Using the services of a property manager can help you to manage your properties, without having it take up all of your time. For more information on the benefits of property management, contact us.