Article by Jeremy Johnson
They say that real estate has created more millionaires than any other industry. While savvy investors do stand to profit from the rental boom, some types of investments tend to be more profitable than others. The best thing to do before even thinking about any investment property type is to have set goals and a sound business plan. Really, the best property type for real estate investing is one that helps meet those set goals and fulfill the plan.
Finding The Best Property Type For Real Estate Investments
It’s no secret that the rental market in the US is booming. Millennials are not buying homes as early as the Baby Boomers did. As the younger generation begins to replace the Boomers, the demand for apartments and rental houses has soared.
In addition, many Boomers are deciding to downsize as they retire. Social scientists have found that more people of every age and of every income level are choosing to rent more than they did only a decade ago.
In fact, there are many concerns that occupancy rates are so high that there may be shortages of affordable housing in some cities soon. In some of the largest markets, this is already the case. Markets vary, but many investors who buy rental homes and apartments have a good chance to do well right now.
Builders and investors are rushing to build or buy to try to meet this demand, but the rental market is expected to keep increasing over the next decade and maybe for much longer. This means that the right rental properties should offer a good investment in the long term.
If an investor’s goal is to purchase property for rental income, it is a good idea to carefully analyze the market to understand the proper price points and demand. Investors should always avoid falling in love with any potential property. What they should do is fall in love with an opportunity that helps them meet their goals.
In different locations, the best type of rental property to invest in may be different than in others. In urban downtown areas, apartment units might make sense. In the suburbs, single-family homes might be more attractive. Many single-family homes have been converted from owner-occupied houses to rental houses in the last decade.
Setting Investment Goals To Buy The Best Investment Property
Typically, one of the main goals among investors is buying property that can return a profit as quickly as possible. If the rent has to be too high for the market, landlords can struggle to find eager renters. It is always a good idea to look around to see which kinds of properties are fully occupied. With that in mind, it is easier to decide if an investment or a property type can return a profit fairly quickly.
While most cities have very high occupancy rates right now because suppliers cannot keep up with demand, there are still cases of properties that struggle to find renters. Either the property is not attractive to local renters or the price point is wrong.
Most property owners worry that they will have to charge too much rent. However, the percentage of high-income renters is also increasing in many cities. In the case of an affluent area, a property that is too modest or old-fashioned might not rent well either.
Right now, rental properties are doing well in almost every major US market. It is a good time to consider this business. However, it is never a good time to consider any business without analyzing the market and setting goals. With this information, it should be simple to decide if a property is really a good investment.
Jeremy Johnson is a real estate enthusiast and has written content for dozens of real estate and related sites around the world. RealEstateCompanies.info is a side project he maintains because of his interest in real estate.