Real estate rental investment is a high-yielding, relatively low-risk investment that provides a solid foundation to diversify your portfolio. However, all investments come with some aspect of risk; the important thing is how you mitigate it. Being a careful investor means finding a healthy, stable investment with a great return.
Keep reading for some tips on how you can find a secure rental investment with optimal returns in Brevard County.
Research and Strategize
When it comes to real estate investing, the more you know about your options and the local rental market, the more likely you are to build up a successful rental portfolio. This starts with understanding your investment fund and what resources are available to help you succeed.
If you find yourself stuck between real estate investment strategies, start by determining the size of your investment budget. Then, find out what tools are available to help you set goals and stick to them. Hiring the right advisors can make building your Brevard County rental portfolio infinitely easier. Important experts to have on your team include an experienced real estate agent, knowledgeable property manager, and reliable contractors.
Calculate the Numbers
To find a profitable rental property, you have to know your numbers. As a general rule of thumb, if the potential rental income exceeds the monthly mortgage, the property is likely to be profitable. Many investors use the “1% rule” to determine if a rental property will be profitable. The rule’s goal is to ensure that the rent will be greater than (or at least equal to) the mortgage payment. To calculate the 1% rule, you must divide the rent by the asking price.
For example, if you purchase a property for $150,000, with a rental return of $1,500 per month, the result is 1% — meaning the property could warrant further analysis.
Understand Vacancy Rates.
No rental business can be profitable without tenants, which is why the vacancy rate is a very important metric for landlords. The vacancy rate shows how many vacancies there are in a neighborhood and gives you an idea of how difficult it is to rent out a property.
While doing your due diligence, it’s crucial that you take the time to get a handle on vacancy rates. After all, if there’s a high rate of vacancies, landlords need to compete with each other, which could lead to lower rental prices and hurt your annual returns.
Remember: Real Estate Investment Is A Business
When considering real estate investment options, it’s important to stay objective and treat the entire process as a business transaction. It’s easy to get caught up in the moment when you’re viewing or purchasing a property. This is understandable if it’s your first time buying, especially if you’re motivated by the prospect of owning investment real estate. However, it’s critical to avoid making decisions based on emotion. If you fail to do this, you’ll be at risk of making costly mistakes.
Real estate is a tangible asset, and it’s fair to assume that if you invest wisely, the property will only increase in value — making it a safe and viable long-term investment. Don’t be put off by ugly-duckling properties because sometimes, in the world of real estate investment, an ugly house on a desirable street is the best option.
If you’re thinking about building your rental portfolio in Brevard County, speak to one of our experienced property managers today to learn more about our services.