Purchasing houses, condos, and other real estate to collect lease payments on can be a steady and valuable source of income. Today’s flexible real estate market offers low interest rates and cheap prices on properties. Meanwhile, renting is becoming more popular as home sales drop. A prime opportunity exists in the market to make money as an owner collecting rent from tenants. But before you start buying fixer-uppers and snatching good-looking deals, make sure you’re making a smart investment. Here are some tips:

1)      Purchase in an area with high rental housing demands, like near colleges or commercial districts. Listings in La Jolla, for instance, would be a smart choice because UCSD is located there. You don’t want to be stuck with a property that simply won’t get rented. An area that is too high class will be reliable choice, although renting rates may be lower. You also don’t want to rent in a high-crime district where tenants are more shifty.

2)      Complete adequate research about the value of properties in the area. You may find a great looking cottage with a perfect price tag, but make sure its not a place that is only going to let you break even when you turn it around to sell again. Spend some time going through classifieds or multiple listings services to find comparable homes in the locale.

3)      Conduct a cost-benefit analysis of the property. Consider the expenses that will be incurred to maintain the house, considering maintenance, repairs, and whether you’ll be keeping a reliable tenant. Keep in mind that some repairs may sporadically arise, such as replacing the carpet and water heater. These numbers should assist in helping you decide the minimum rental amount you should list the property for.

4)      Simple houses are easier to maintain. Although the beautiful historic home across town is going up for a tempting price, remember that the place may not be worth the effort to keep up. Instead, search for simple styles and architecture, with parts that are cost efficient and readily available. Older homes may be cheaper, but will undoubtedly incur greater maintenance costs.

5)      Put yourself in the tenants’ shoes. If you were looking for a house or condominium to lease out in the area, what would you look for? The answer may not be hard to come by.

Investing in  real estate offers many opportunities these days, and if you take the right approach you can truly make a good living as a landlord.

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