Over the last five years, many people across the United States have invested in rental properties with the goal of diversifying their portfolios, building positive cash flow and creating income for their retirements.
Besides the most common questions regarding getting started in Real Estate investing another common question that most investors have these days is if they can reach a six-figure income from rental properties and the answer to this question is yes.
Creating Six Figures from Rental Properties Won’t Happen Overnight
Before getting started with investing in rental properties with the purpose of creating a six-figure income one important thing that we want to stress is that as with any investment it takes time to build wealth and you have to be willing to commit yourself to investing in rental properties because the income from them won’t just happen overnight.
How to Buy Your First Rental Property
Right now, some investors will have the cash to invest in their first rental properties, and that’s great, but for those who are just getting started with investing in rental properties without a lot of cash to get started we recommend investing in fixer upper properties.
When you invest in a fixer upper property you can generally purchase it for 70% of its After-Repair Value (ARV), depending on area, and after you invest your hard-earned time and money into the rental property you can then rent that property out, refinance the mortgage, and use that cash towards buying another rental property.
How Can You Get Started?
Since most lenders will not lend money on a fixer upper property you may have to consider using the equity in your current home, private money, hard money, or a similar loan to get started with buying your first rental property.
The opportunities are out there and all it takes is spending the time searching for them.
Many successful house flippers and Real Estate investors use the 70% margin mentioned above when searching for rental properties and when you start searching for rentals that match this criteria you will see that there are great properties out there that could be turned into rentals.
“Rinse and Repeat”
Once you’ve purchased your first rental property using the 70% ARV formula mentioned, rented out the property and refinanced it, the simple thing to do is to keep following the same formula of finding a great property that needs rehab, getting the rehab work done, renting that property out, refinancing the mortgage and repeating the process again.
Investing in Rental Properties takes time but the results and profits are worth it.
Besides repeating the formula provided in this article another key to success with investing in rental properties is to hire a professional property management company because, a company like RPM Central Valley will save you the time, money and hassle of doing all of the work necessary to manage your rentals.
Learn more about the property management services we can offer you by calling us at (209) 572-2222 or connect with us online.