The concept with investment rentals is to invest in properties where the rents, minus all the expenses, provide positive cash flow. Many investors don't do their homework, don't rely on expert representation and end up with just the opposite.
Expert investors seek some types of rental investments more than others. Obviously, if you read enough on this topic, you will find that everyone has their own opinions on investment rentals. Here's a short list of possibilities:
- Multi-Family Dwellings (2-4)
- Apartment Complexes
- Multi-Unit Office or Retail Buildings
- Contractor Yards
These properties are more for the full time investor. Some also require on-site managers. These real estate investments are long term though. In multi-unit buildings, you mitigate the risks of total vacancy. As in most rentals you will experience a vacancy rate. If you have a one unit property, a vacancy means 100% vacant, and no income!
As a rental investor, it is best to have cash buying power upfront and great credit. In this case, with proper planing and smart buying, you will have the opportunity to refinance and receive back all or most out of pocket expense for improvements and initial closing costs.
Having your money back in the bank allows you to continue building your portfolio of properties.