How to Invest in Rental Properties?

Real estate investment has become a general topic, which is often seen as a topic of discussion everywhere. While you will come across many people who claim to be masters of the game, your goal is to learn how to make profits by investing in properties. If your goal is to generate regular income in the long term, rental properties are the ideal options.

Housing

Focus on Long-Rental Properties

Long-rental properties are the ideal options when it comes to investing in real estate. While traditionally you had to put down a lot of cash to own a rental property, the dynamics have changed recently with banks and builders offering lucrative offers.

Today it is possible to own a rental property for a small down payment, and the returns are promising as long as you don’t jump into just any deal. In fact, there are many people out there who now own such properties while their rentals (or part of their rentals) are paying their EMIs. So you will own such a property by paying a small amount upfront and virtually letting the tenants pay up the remaining amount.

That is a great way to become the owner of a property within the next few years (depending on the duration of your loan).

Cash Flow

When investing in long-term rental properties, it is important to consider the cash flow factor. A good strategy will be to purchase a property below its market value, perform all the essential repairs, and improve its value. This is a good strategy to get more rental out of a property and improve your cash flow.

Invest in Single-Family Rentals

Choosing a single-family rental property is more economical than a multi-family one – especially in India. They are cheaper and are easier to fill up. The right real estate brokers in delhi can help you find the perfect property. But the trend can be different in some cities and areas.

Commercial Properties

This is a deviation from residential property investment, and I see that not everyone can enter this sector. There are two factors which make it different from its residential counterpart (in terms of returns):

  • Commercial rentals are difficult to fill up.
  • Commercial rental properties have much longer rental terms.

Then there are different types of leases and the loan terms and interest rates are also much dissimilar.

So as a rental property investor, it is more reasonable to look for residential properties on the market.

Current Status of Yields from Residential Property

According to the latest report, the current status of yields from Indian residential properties varies from one city to another. There are some major differences in prices and returns in major cities.

If we compare New Delhi and Bangalore, the difference is easy to tell as the capital region is relatively far ahead. For example, the per sq. m. prices in 2014 in New Delhi were over $ 2,980. The maximum rental yields were 2.14%. This was much less compared to 2007, but according to industry analysts this is a positive sign that the market is recovering.

At the same time the average residential prices in Bangalore peaked at $ 1,172 per sq. m. This was much less compared to the national capital, but the rental yields at peak of 3.70% are better. This is however again much less compared to the pre-recession period.

There is a lot that you could learn about different cities. The internet and the new integrated technologies make it easier for potential buyers and investors to keep updated with the latest real estate market trends. Besides, there are so many websites and applications that have revolutionized the real estate market.

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