Building wealth through real estate is any investor’s dream. With the new year quickly approaching, it’s time to start devising your real estate investment strategy, and buying income property is one of the best decisions you can make. Use this income generating assets list to find out how you should invest.
Foreclosures
One of the best income generating assets you can get your hands on is a foreclosure. Whenever a homeowner is unable to pay off their mortgage for several consecutive months, the property is reclaimed by the lender. The property is then sold off via a bank or other financial institution at far below market value. Foreclosures can be purchased at around 15% below their market value, giving you a fantastic opportunity to reap returns. If properly fixed up, you could establish a rental property or flip the investment property for a much lower than average cost.
Related: How to Find Foreclosures: The 9 Best Ways
Off Market Properties
Not all profitable investment properties can be found with a “for sale” sign on the front lawn. Off market listings are those which are not publicly listed, and for which the listing agent must find a buyer independently. These can be a goldmine for real estate investors if they know where to look and how to find them. One of the biggest reasons this is a great income producing asset is because of your power to negotiate. Since the property is not publicly listed, you will face far lower competition when bidding. If you’re able to negotiate a great price, this can be a substantial source of income.
Start searching for off market properties now in the Mashvisor Property Marketplace.
Single Family Homes
Single family homes are traditional detached housing units, which make up a majority of residential real estate investments. The market for single family home rentals is growing, as more people are inclined to rent for longer periods of time. One of the biggest advantages of this property type is its low ongoing expenses, making it an ideal income generating asset. Unlike investment properties that house multiple tenants, all utilities and ongoing maintenance costs will be covered by the tenants. This means lower costs, less hassle, and a higher return on investment overall! This makes single family homes great income generating assets for beginners.
Multi Family Homes
The market for multi family homes is expanding quickly, and now is a great time for real estate investors to get on board! Moving into the new year, multi family homes are an increasingly popular option for many young professionals and families who are not yet ready or able to purchase their own homes. There’s a solid reason why multi family homes are hailed as great income generating assets. From the investor’s standpoint, these rental properties offer multiple income streams, without a significant increase in ongoing costs. This means a higher return on investment and a great choice for any real estate investor.
Related: Best Income Generating Assets in Real Estate: Multi Family Homes
Condos
Condos are a fantastic investment opportunity if investors can find the right one. Many real estate investors shy away from condos due to some added expenses like Homeowners Association Fees. However, considering their low average cost in comparison to some other income generating assets, you can still often make a substantial return on investment. Consider investing in condos for 2020!
Airbnb Investment Properties
The market for short term rentals is continually reaching new peaks. It seems every year offers more and more income potential for Airbnb property owners, without signs of slowing down. Depending on the specific property, many real estate investors have discovered the goldmine of Airbnb investment properties, which can sometimes be more profitable than traditional rentals. While sometimes volatile, peak tourist seasons can offer investors multiple times the income potential of a traditional rental property. Consider using Mashvisor’s tools, such as an Airbnb calculator, to discover whether a rental property will be more profitable as a traditional or Airbnb investment.
Duplexes
A duplex is a housing property with two units, each of which has its own entrance. These can be fantastic income generating assets because they often entail much higher rental income for real estate investors. They offer a huge advantage over single family homes since double the tenancy means your income potential is multiplied. Furthermore, the market for duplexes is often families and those who intend to live there in the medium- to long-term. This means less tenant turnover and a more consistent stream of rental income overall.
Fourplexes
Along the same lines as a duplex, a fourplex contains four distinct units. And if a duplex doubles your income potential, then imagine what a fourplex can do! These income generating assets offer the unique advantage of housing multiple tenants, each of which will pay you monthly rent. Shockingly, though, this property type is typically on the lower end of the price scale. Thus your return on real estate investment can be substantial!
REITs
A real estate investment trust is a type of company which deals with the ownership, management, and financing of real estate assets. Much like a publicly-traded company, investors have the opportunity to purchase shares in REITs and expect dividends from its profits. A major advantage is that you won’t need to do the legwork of finding investment properties and managing them. If you’re looking for passive income ideas, REITs are a great way to go! REITs are often a safe investment due to their diversified portfolio of income generating assets. And better yet, you won’t be held liable to the cost of a rental property, since you can invest however much is feasible for you.
Related: Start in Real Estate Without a Big Deposit
Townhouses
Townhouses are a series of attached housing units, each of which is available to a different tenant. In most cases, townhouses will have a separate backyard for each inhabitant and some shared common spaces. One major advantage of townhouses as income generating assets is that they are significantly cheaper than a traditional single family home or comparable alternatives. The market for townhouses is usually families who will be committed to their property for years at a time. This makes townhouses a great choice for a real estate investment.
Bottom Line
Investing in rental property is the best way to generate income as a real estate investor. Having an income property in your portfolio is a great way to build wealth and a feasible way to take on real estate investing as a full-time job.