{"id":18155,"date":"2020-03-14T13:31:58","date_gmt":"2020-03-14T18:31:58","guid":{"rendered":"https:\/\/www.abodo.com\/blog\/?p=18155"},"modified":"2020-03-11T13:41:11","modified_gmt":"2020-03-11T18:41:11","slug":"what-real-estate-investors-need-to-know","status":"publish","type":"post","link":"https:\/\/www.rentable.co\/blog\/what-real-estate-investors-need-to-know\/","title":{"rendered":"What Investors Know About U.S. Rental Property Market"},"content":{"rendered":"

If you really want to have an awesome way to build your wealth, investing in rental property<\/a> is the way to go. However, like everything else in the world of money, it\u2019s not a plug-n-play where you just choose one property to rent out and money will just come. The Rental Property market is diverse and somewhat unpredictable to navigate through.\u00a0<\/span><\/p>\n

There are a few indicators that you\u2019ll need to consider, but you will still need to familiarize yourself with the different markets in the country.<\/p>\n

How Do You Earn?<\/strong><\/h2>\n

The main reason why you buy property to rent out is to earn money. According to<\/span> ISoldMyHouse.com<\/span><\/a>, real estate investors are looking for a property or properties that will bring in a future income stream. Investors come in different forms such as Landlords, Flippers (those who buy houses and sell them for a profit, and property investors. They usually market these houses for sale or in some cases to rent out.<\/span><\/p>\n

If you\u2019re thinking of investing in renting out your real estate, you should learn how you earn. So how do you calculate your returns from your rental property? The 1% rule is a good indicator that your property has a good chance of earning an acceptable amount of money. However, this shouldn\u2019t be the only rule to follow. If you\u2019re earning below the guideline, you can still meet your goals with the right conditions. It also follows that even if you meet the 1% mark, but underperform on other aspects of the market then you may still be in trouble.<\/span><\/p>\n

What is the 1% rule? It is a guideline that your monthly gross should be 1% or the property\u2019s purchase value. One example is you purchased a house for $100,000 in a certain neighborhood. And you learned from your research that you can earn $1,000 per month from renting your property. This means that you\u2019re earning 12% of the purchase value annually. And your monthly rent is 1% of the purchase price. Normally, this percentage will cover your expenses and will still have enough left for you.<\/span><\/p>\n

As mentioned above the gross income of your property will still cover your expenses and a good rule of thumb is 50% of the total annual gross. Using the example above the annual income of $12,000 will be subtracted by as much as $6,000 annually to pay for incurred expenses. But it\u2019s usually the maximum cost and the normal range will be less than that.\u00a0<\/span><\/p>\n

There are two major categories where your expenses come from:<\/span><\/p>\n