Are you thinking about investing in rental properties for the first time? You may be worried about what impact the COVID-19 pandemic is having on the real estate market.
But the real estate market is an excellent choice for long-term wealth creation. Coupled with stock market trading, investing in rental property is a tried and tested method of making passive income over the long term.
If you’re keen to start investing in the rental property market, keep reading to find out how!
Here are the best ways to invest in rental property for the first time.
What is a Rental Property
A rental property is a type of housing that is owned by an individual or corporation and rented out to tenants for a certain period of time. Rental home communities come in all shapes and sizes, ranging from single-family homes and apartments to high-end condominiums and commercial spaces.
1. Long-Term Rental Properties
Long-term rental properties are properties that are leased or rented to tenants for periods longer than just a few months. This may include houses, apartments, condos, and other types of properties. Tenants are expected to abide by the terms of the lease/rental agreement and pay rent in a timely manner.
Investing in a rental property with a long-term setup can provide a steady stream of income. These properties can also be used as a passive income source if managed well. Long-term rentals are usually attractive to people since they offer the security of a reliable income and the ability to live in a location for a longer period of time.
2. Short-Term Rental Properties
Short-term rental properties are rental accommodations that can be rented for a short period of time. It usually ranges from one day to several months. These rentals are usually furnished and are located in popular tourist areas, allowing vacationers to stay in a convenient place.
People who choose to rent a short-term rental property often have more flexibility, pricing, and amenities than renting a long-term residence. Short-term rentals can be found online, through real estate agents, or from vacation rental property owners directly. While it may require more of an upfront investment than short-term sublets, short-term rental properties do offer more peace of mind for those wishing to explore a destination for a short period of time.
3. Fractional Ownership
Fractional ownership rental properties is a type of real estate investment that involves many investors owning a portion of a single property. It can create numerous benefits for owners, tenants, and investors alike.
Each fractional owner will have access to a fraction of the rental income, depending on their ownership stake. Often enough to cover their mortgage. Additionally, fractional owners will benefit from rental income, appreciation, deductions for depreciation, and more.
Fractional ownership rental properties offer more diversification than traditional real estate investments and improved liquidity. It also allows owners to purchase less expensive properties and make more efficient investments.
Invest in Rental Property Today
There are numerous ways you can invest in rental property for the first time. From tax advantages to ways of owning property without actually owning it, starting a rental property business can be a rewarding experience! To get started, research and plan the best option for you and begin your journey to success!
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