Is it possible to make money investing in real estate? You see all of those ads for courses that cost hundreds of dollars, and claim to teach you how to make money by investing in real estate. The truth is that some research and knowledge can save you hundreds, and even thousands, when you invest in rental property. 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 property, but there are a few disadvantages as well. One advantage is that it is a long term investment that in the past has given an annual rate of return at around nine or ten percent. This is comparable to the stock market, but with significantly less risk. The capital gains tax on any profit 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 property 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, like six months or one year. The advantages are less vacancy and more stability. There are some disadvantages to having a longer lease time as well.
One is that it takes much longer to get an unwanted tenant out due to the legal system. With a month to month lease you are only required to give a tenant one month of notice to have them move. Certain groups of people, like college students and workers who may be reallocated among others, actually prefer a short term month to month lease, and these groups will usually not sign an agreement for an extended time.
A short month to month lease can actually save you money in your real estate investing. This is because it is easier and quicker to raise the rent if your expenses for upkeep and other costs go up. With a longer lease, you cannot raise the rent for that length of time, even if your costs go up. With a month to month lease, if your costs go up, you only have to give the tenant one month of notice before you can charge them more.
In summary, it is sometimes better to have a month to month lease with your rental real estate investment. The benefits far outweigh the costs, and certain good tenants would prefer the shorter terms. The short time length allows you to get any undesirable or non paying tenants out a lot faster, so good tenants can be found and moved in.
This can save you quite a bit of money, repairs, and hassles. You invested in real estate to protect your money and make it grow, and a shorter lease period will work harder for your money.