Advanced investors are not the only ones with the potential to gain income from rental properties. These statistics show it’s possible to generate cash flow even as a beginner.

Here are some other facts to consider:

• The median monthly expense per rental unit is $325.
• 41% of renters live in single-family homes.
• The median estimated market value for every rental unit is $110,800.
• Rental unit owners are estimated to spend an average of $500 per rental unit on capital improvements.
• The median price of single-family homes rose by 99% in measured metro areas in the second half of 2021.

Sources: National Association of Realtors, U.S. Department of Housing and Urban Development

Geography and demographics play a significant role in determining the value of a rental property and making a profit in the long term. Knowing how to evaluate a property can make the difference between a successful investment or filing for bankruptcy.

Examine the neighborhood

In real estate, neighborhoods are broken down into three classes, with Class A being a neighborhood that would have the lowest turnover rates, Class B having a moderate turnover rate and Class C having high turnover. Neighborhoods can determine the long-term income potential of a property, so ask yourself: Is it safe? Are there any redevelopment projects going on? What are the vacancy rates?

Find the nearest establishments

Key establishments and institutions, such as a clinic or hospital, pharmacy, school, police station and mall, can boost the value of a rental and make it a more viable option for tenants.

Check the demographic

Demographics can impact your earning potential as a landlord. For example, is the area full of students or families? If it’s full of students, you may have a steady stream of tenants, but you may also deal with a higher vacancy rate. If there are predominantly families, you might want to opt for properties with multiple bedrooms.

Look at the interior and exterior

Carefully evaluate the interior and exterior for work that is needed immediately and further down the line. Unless you’re squarely focused on the fix-and-flip strategy, avoid properties that need noticeable repairs or completely renovated kitchens or bathrooms.

Negotiate the deal

We work with your budget and negotiate the ideal purchase price to make sure you get the ideal return on your investment (ROI). We will find that ideal neighborhood, and research the track record of that area, tenants, and other area comps.

All transactions are process using our partnership with GreenLux Properties, currently licensed in California, Illinois and Florida.

Involved investors may be well-suited for overseeing short-term rental units that require steady upkeep. Passive investors may decide to invest in REITs or even rid themselves of the hassle by paying for the services of a property manager. Knowing what type of investor you are can help determine what real estate strategy suits you best.

The Involved Investor

Involved investors may not mind short-term rentals and wholesale properties that require a high level of energy and commitment. Such properties can be profitable but demanding.

The Passive Investor

The passive investor is hands-off and may opt to pay for the services of a property manager or invest in real estate investment trusts (REITs). By investing in REITs, you earn income from a company that owns and operates real estate.

The Inquisitive Investor

Young professionals may be juggling the demands of a full-time job or family. One way to entry: renting out an extra room at home or turning a garage into an additional apartment.

The Full-Time Investor

Full-time investors may spend a significant amount of time choosing houses and fixing them up just enough to sell or rent for the highest reasonable price.