The goal of investing in rental property is to earn a profit from the rent you charge to tenants. However, depending on the characteristics of the property, the market conditions at the time and the specifics of your situation, investing in rental property may or may not be a lucrative choice. That being said, is rental property a good investment in TODAY’s market? Here are some factors to consider…
According to housing market experts, now is one of the best times to invest in a rental property if you have the cash. Housing prices have dropped, making home and apartment purchases much more affordable for investors. In addition, mortgage interest rates are at an all-time low, so it’s possible to make a handsome profit on a rental even if you need to finance it with a mortgage.
The rental market is also ripe for investors. Rental rates continue to increase in virtually every major metropolitan area. Coupled with the affordable housing prices and the low cost of borrowing, investors who purchase rental units now are likely to have a healthy earning potential.
Even though the market is in a good place for investors, not every rental property offers the same earning potential. For example, properties located in low-income areas may not be able to bring in as much rent as a similar property located in an area with a higher average income. When deciding whether to invest in a rental property, consider these characteristics:
In the end, whether you should purchase rental property depends on the specifics of your situation. Market conditions are excellent for investors, so if you have the capital available, this is the perfect time to make a move. However, if you have limited funds, or if you can’t qualify for an affordable mortgage, investing in a rental may not be a wise choice.
Before you make a final decision, do plenty of research. Sit down and look over your options carefully. Estimate how much the investment will cost you and how much you are likely to earn. If you believe the investment will bring in enough money to make it worthwhile, go for it! On the other hand, if you think the purchase is too expensive or the profit isn’t high enough, look for some other ways to invest your money.