Each year, countless Americans purchase a new home, with many of them becoming homeowners for the first time. For many other Americans, the best option for them is to rent a property until they decide to purchase a home. This provides a great opportunity to invest in residential real estate. Renting out a property can provide a great boost one annual income for those who are interested in trying a smaller investment. For anyone who is thinking about investing should know some of these important terms.
Real Estate Appreciation
In general, real estate appreciation refers to a property that has seen significant growth in value as a result of an exterior factor. For example, of a shopping center or office building is built nearby of a property that you own, then it will automatically increase its value. It can be difficult to predict when a neighborhood is going to be updated with new businesses, so new investors may not find this approach to be a fit.
Cash Flow Income
For investors who are interested in purchasing a property, this is the most practical approach. After purchasing and preparing a property, tenants will live there and provide monthly rent, making it a great way to increase an annual income. Additionally, this approach can be taken for commercial real estate properties, including apartments and office buildings.
Short-Term Property Vs. Long-Term Property
While renting out something like an apartment is typically for longer periods, short-term properties are quickly growing in today’s real estate market. Short-term properties refer to residential properties that are rented for shorter periods, which can range from one night to a couple of weeks for many. An example of short-term properties includes Airbnb, which is an app that allows people to rent the home, as many travelers are finding that renting a house as a group can be cheaper than hotels.
Long-term properties, on the other hand, refer to properties that are rented out for an extended period. Long-term rentals can be occupied by the same tenant for several years. Examples of long-term properties include apartments and single-family homes. While it can be more difficult to get continued income with a short-term property, there is more potential to increase income over time, especially if a long-term property tenant has rent control.
While there are many terms that potential residential real estate investors should know, these are a great way, to begin with. The process of investing in residential real estate can be difficult, but it is often a great way to earn money.
About The Author
Jack Nourafshan is a distinguished real estate development professional and entrepreneur in Los Angeles, California. He is the President of Reliable Properties, a real estate acquisition, development and management company in the Los Angeles area. Jack has over 30 years of professional experience that has made him known as a leader in the industry. Jack Nourafshan started a blog on entrepreneurship to share his insight and experiences for aspiring entrepreneurs.