Investing in Real Estate, Invest, Property, Tenant, Money, Real estate, Income

30 July 2020

​Earn Money by investing in property

Investing in real estate can be rather lucrative when done correctly. Whether you choose to let your property short-term via popular sites such as Airbnb or Booking.com, or opt for long-term tenants and assume the role of a traditional landlord is up to you. Both strategies can supply you with extra income you need to have a comfortable lifestyle and carefree retirement. So let’s discuss these strategies separately and see what advantages and disadvantages each of them offers. 

• Short Term rentals to earn money 

If you own a property such as flat or a private house and want to use it to generate additional revenue, one way to do so is by converting it into BNB (bed and breakfast) and/or signing up to online platforms that specialize in this kind of business (e.g. Booking.com, Airbnb etc.).

These platforms offer homeowners an opportunity to set their own rates and make money on a daily basis. With the increase of international, as well as domestic travel (caused mainly by globalization and the reduction in plain ticket prices) more and more travelers need accommodation.

So investing in real estate with the purpose of letting it may be a smart idea. Generally, if you opt for short-term rental strategy you can expect to make up to 30% more than what you would have made if you had chosen to rent in a traditional, long-term manner.

However, managing a constant turnover of guests also means there is much more work to be done. So this does not really count as passive income, since you constantly need to keep an eye on the property, meet and greet guests, clean the accommodation before renting it to the next person etc. Fortunately, there is a solution.

You could hire a real estate management company, and it would take care of these needs. This may be a smart way to do it, since without the help of the management company the onus would be on you to stay on top of taxes, contracts, pricing, competition and laws that apply to short-term rental properties. 

Another thing you should not forget to calculate when it comes to short-term renting is the ongoing expense, meaning the utility bill. Guests who rent your property for a day or two will not have to deal with the water bill or electricity bill, it is up to you to pay those off. So make sure to factor in the potential costs when you are deciding how much to charge for your property.

The daily rates of your property may change over time depending on the season, new amenities that have been built nearby etc. However what will cause the biggest increase in the amount you can charge is you renovating your property. People will pay more for comfort, and making sure your rental place is nicely furnished and equipped with modern gadgets will certainly make you stand out from the competition. You can also upsell additional services (e.g. additional meals, cleaning services etc.)

Also, you need to consider that if you own a property in a place that is famous for seasonal tourism, the off-season months may not be as lucrative as the rest of the year. You need to research similar properties who offer this service and think about how you are going to deal with the potential vacancy of the property during the off-season period. 

Overall, short term rental will help you earn more money, however it requires more work and vigilance. So if you have a full-time job you may want to enlist the help of a third-party company that will help you manage your property.

• Long-term rentals to earn money

Another way to earn money by letting your property is through finding long term tenants and becoming a landlord in a traditional sense. You can start by conducting a market research, by looking at the similar properties that are being rented out in your area.

This will help you get an idea of what sort of income you should expect from your property. Sites like Zillow or Rent.com are providing these services. It is also a good idea to contact a realtor in order to discuss relevant rental units and upcoming market trends. 

If you manage to fins decent tenants that are willing to rent your property for a long period of time you will enjoy your passive income for decades to come. However, it should be noted that landlords do on occasion experience setbacks that may interrupt this flow of cash. One of these set backs may be vacancy (i.e. when your property remains empty for a period of time). Also, there are various management fees associated with finding and, perhaps, later on evicting tenants.

There is also the issue of delinquency, which means that tenants may pay their monthly rent very late or not pay it at all. In addition to all of this, some tenants may leave the property in a damaged state, which means that you will have to repair the damage before you can let it to another tenant. In this case not only are you spending money by having the property repaired, but you are also losing valuable rent time which could have brought in the money. 

Whether you are going to let your property short or long-term it is a good idea to get insured against any potential damage. This is especially important if you are letting your property short-term via the Airbnb or another popular platform. A guest who is staying in your house of a flat for a day may cause serious damage to furniture or the equipment and evaporate into the thin air before you have even realized what has happened. 

Overall, becoming a traditional landlord and finding long-term tenants is a good way to get passive income. The yield may be smaller, but there is less headache as well. 

If you are unsure about how to get a handle on all of this, in order to avoid potential difficulty it is recommended to hire a third-party property management company. 

Proper landlord insurance is necessary.

Contact mybestlifestyle.pro TODAY to begin your successful journey!

Also, Lea's a realtor in Palm Springs and Los Angeles and would be happy to help you or work in tandem with another local team. If you have a more complicated case be sure to call Lea to get help with your short-term rental needs. Number (323) 435 - 3398 . Reach us via email at Team@MyBestLifestyle.pro today!