For anyone who’s been investing in Capitol Hill rental properties, it’s common knowledge that making a profit through your investments is what leads 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.
Just because you invest in rental properties doesn’t mean you’re automatically going to get rich. It is, after all, an investment like any other — it comes with variables that have to be taken into consideration. Nonetheless, with access to a wealth of resources, anyone is capable of learning how to make money in rental real estate quickly.
Quick but Risky
It’s true that the more profitable approaches to real estate investing come with time, there are other ways to make smaller profits with real estate. What, you may ask? House flipping. It’s not all that easy, though. It still has its own pros and cons. As an example, house flipping allows you to make extra profit annually.
The process of locating, buying, renovating, and then re-selling just one property can require a certain number of days, weeks, or years, even! In that time, a lot can change. For example, you could discover repairs that are necessary or a downturn in the market. To create a steady income stream, you will need to be updated with local investment properties, as well as have a few renovation projects on the side. This can be a source of stress, and it will demand a lot of your time.
Profitable (Maybe) and Volatile
Something else you can do 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. A big drawback to these rentals is that the owners will have to rely heavily on a volatile market. A lot could happen when there is a decline in tourism or when an event doesn’t go as planned. This could render the property not so profitable.
With short-term and vacation rentals, the key to steady income is to have multiple tenants. Tenant screening will be such a long process, though! It’s also inevitable to experience some noticeable wear and tear, given the number of people going in and out of the property every 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
There are less riskier methods, though; like the buy-and-hold approach to real estate. It can be just as profitable, and without all the problems that come with risk. The go-to for most real estate investors have almost always been long-term rentals. They have a good reason for their choice. Long-term rentals, such as single-family rental homes, require far less attention on a day-to-day basis. Tenants in these rentals tend to stay for long periods of time, especially because the number of renters has shot up in years past. This means that you don’t have to worry so much about marketing or finding tenants.
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. With vacation or short-term rentals, that’s simply not the case. 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.
Interested to grow your income by investing in rental real estate? Let us help you. Our Capitol Hill 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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