No matter when you started investing in Redwood City rental properties, you can always learn how to gain more through your investments — that is the key to long-term success. According to recent data, individual real estate investors own almost 75% of all rental properties in the U.S. And, with home values on the rise in markets nationwide (more than 19% since 2020!), buying real estate is both a popular and a potentially profitable way to build wealth.
Don’t fall into the trap of thinking that investing in rental properties will immediately make you rich. It is, after all, an investment like any other — it comes with variables that have to be taken into consideration. Nevertheless, with the proper set of information and skills, anyone can easily learn how to make money in rental real estate quickly.
Quick but Risky
Yes, the most profitable approaches to real estate are the ones that require a certain period of time. But, there are still ways you can earn a few dollars here and there with real estate. House flipping is one of those ways. Still, it has its pros and cons. For instance, house flipping can turn a profit on a yearly basis.
The process of locating, buying, renovating, and then re-selling just one property could take up to a year or so. There are a lot of things that could go wrong in that amount of time, like repairs or a sudden downturn in the market. To create a steady income stream, keep searching for investment properties, and have several renovation projects going on at the same time. Be warned: this will be quite stressful, and it will most likely eat up a lot of your time.
Profitable (Maybe) and Volatile
Another means to make fast money by investing in real estate is to buy property as a vacation or short-term rental. Some investors like the idea of charging far more than long-term rental rates for a property, especially if it is near popular vacation areas or destination spots. The difficulty with owning these rentals is that owners are subject to all of the ups and downs of a volatile market. If tourism declines, this could lead to events being canceled. Things like these could inevitably affect your property and make it unprofitable.
The thing with short-term and vacation rentals is that you need many tenants to earn a steady income. The tenant screening process, though, is such a pain to handle. Wear and tear is something to take seriously, especially when you have many tenants going in and out of the property each week. When wear and tear happens quickly, you will need to spend on maintenance and repairs. That means an increase in costs. When the competition is high, hotels are cheap, and the rental property is hard to rent out, this creates a loss for your investment.
Profitable and Stable
The buy-and-hold approach to real estate, however, offers just as much profit as these riskier methods. Plus, you don’t get all of that stress in your life! The go-to for most real estate investors have almost always been long-term rentals. They have a good reason for their choice. The freedom that long-term rentals like single-family rental homes offer allows investors to spend less time keeping an eye on their properties from day to day. It’s normal for tenants in these rentals to stay for a couple of years; especially now when there are already so many renters who are looking for rentals. This makes marketing and screening of tenants less stressful.
What is more, tenants in long-term rentals tend to take better care of the property and can be relied on to help with regular maintenance tasks. Sadly, the same can not be said of vacation or short-term rentals. With long-term rental properties, rental income is far more regular and steady, and over time, property appreciation can make owning long-term rentals one of the best ways to build real wealth.
Want to make money by investing in rental real estate? Let us help you. Our Redwood City property managers work with investors like you to help find, assess, and manage quality single-family rental properties. Contact us online to learn more!
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