What Is A Good Cash Flow On A Rental Property Finding Low Risk Investment Rental Housing Opportunities

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Finding Low Risk Investment Rental Housing Opportunities

In general, low risk is not part of the high ROI formula. However, today’s rental market offers a possible exception. The real estate meltdown is creating investment opportunities in rental homes that should provide superior returns for years to come. My personal favorite areas to search are apartments, townhouses, and multi-family properties. The values ​​of many of these rental housing options have CRASHED. Even better recent laws and funding from the US government will force a large number of these homes onto the market in the coming months. Combine this with a series of mortgage resets on the horizon and the opportunity for potentially even better values ​​is very real.

In one real-life example that I know of, a young college student ended up buying an apartment at a price that would cover the mortgage simply by renting out just one bedroom.

In one of the less event-damaged markets in Washington, DC, where occupancy remains high, you can buy condos and townhomes that will generate between 8% and 15% annual returns on cash investments. These are homes in prime locations with excellent local transport and sustainable neighborhood strength over decades.

Enough examples, the investor should look for projects that offer the following characteristics:

  • Strong neighborhoods with excellent shopping, amenities, schools, transport and business,
  • Physical structures that promise minimal maintenance (one of the reasons I love apartments is that your responsibility is limited to the interior only),
  • Financing options for potential sellers,
  • Shortsale price reduction,
  • Foreclosure auctions,
  • Sales tax

Next, you should take the time to see what government officials’ plans are for development and employment in the area. Finally, take the time to check the initial conclusions you made about the neighborhood. The neighborhood should be strong and get stronger.

Finally, don’t shy away because a cash purchase is required. Other people’s money does not necessarily mean bank debt. In today’s economic environment, you may be buying with investment capital and getting a return on the management and development efforts you put into the opportunity.

Savvy investors who understand the trends described above will be rewarded for finding and taking advantage of these opportunities as limited new construction over the past few years translates into higher rental demand in the coming years, further increasing your returns. There has never been a better time to complete the purchase of a rental property. Today’s relatively strong yields are likely to multiply as traditional lending yields allowing for more normal leverage levels and increasing your income-to-investment ratio.

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