I’m curious about real estate and renting. I’m not so much wondering about the renter’s side of the bargain–as a college student, I’m already living that part. I’m more curious about the idea of owning a property and renting it out in order to make money. It seems to me that in areas like ours, landlords can make a lot of money by owning properties and renting them out. They can then take their profits and invest them in more properties, making more and more money as they acquire more and more properties and tenants. How does a person get involved in real estate and renting?
It’s certainly true that there is money to be made in real estate and renting. When done right under the right conditions, renting out properties can really bring in the cash. Of course, the practice is not without its risks, and focusing entirely on real estate can be a tough investment strategy–particularly for those who might be planning to do so on the side, rather than as a full-time job. Let’s examine the process a bit.
At its simplest, real estate and renting just involves buying a property and then renting it out. And there are a lot of things about the process that make it easier. A landlord can find places to advertise rental properties for free, and landlords who find great tenants can count on reliable rent payments and limited depreciation for their property.
But there are risks and complications, too. Before buying a rental property, a potential landlord will want to check out all sorts of potential roadblocks. Do local regulations or neighborhood association rules prevent the space from being rented or limit the number of people that can live there? Are there problems with the structure or space that will cost money to fix? And how appealing would the property be to renters–is it near transit lines, schools, and workplaces?
From there, a landlord may work with a real estate agent to attract potential tenants, or they may advertise on their own. Checking tenants’ backgrounds and financial situations is a vital step, because a bad tenant can cost a landlord a lot of money. Damage to the apartment may be offset by security deposit penalties or even a lawsuit, but those are hassles that landlords would prefer to avoid. And deadbeat tenants can be hard to clear out of the space, particularly in regions that make evictions legally difficult.
In other words, real estate rentals are not necessarily the best investment options for amateurs. For those who are willing to do the research and the work, though, they can pay off. Millions Americans rent their living spaces, and more Americans are renting now than at any point since the 1960s. Landlords who manage things properly can earn cash while maintaining an investment in a property that–ideally–may increase in value over the years.
If you’re interested in getting into real estate, your best bet would be to speak with experts in person. Only professionals who know the details of your ideas can give you advice tailored to your situation and goals. We’d recommend you speak to an attorney who specializes in real estate, as well as with a financial advisor who can tell you how you might stay financially secure while putting a portion of your savings into a rental property.
“Innovation comes out of great human ingenuity and very personal passions.” – Megan Smith
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