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Residential Investment Properties as Alternative Income

Nov 30, 2007
Lately, there has been an increase in the number of people acquiring residential investment properties. If managed properly, they can provide you with a steady source of income for a number of years, or until you decide to sell.

Residential properties are different from commercials ones in that someone is making a home there. You become the legal landlord, and, therefore, responsible for the upkeep of the property. In addition to keeping the location livable, you must be ready to take care of problems as they arrive.

This may seem daunting for some, but there are reasonable solutions to such common problems. Unless you are a professional do-it-yourself wiz, your best bet is to hire a management company to maintain and repair the property when problems arise.

This may seem like a hassle at first, but you have to consider the results of keeping a rental home in good repair. No one wants to live in a run down dump. If you don't maintain the building, then no one will want to rent. For you, that means no revenues from your investment to pay for the mortgage due every month no matter what. Additionally, you want to keep the property in good repair because when you decide to sell it, you want it to have appreciated.

When you decide that you are going to assume ownership and care of a residential investment property, be prepared to commit yourself 100%. It takes time and sometimes your personal money to keep the property generating revenue. The money that the rental makes should pay for its maintenance at the very least. Ideally, it will also return a profit.

You can expect two types of revenue from your investment: yield and capital gain. The yield is what you can expect from rent annually. The capital gain is the appreciation value once you've resold the property. Keep in mind that high yields usually generate low capital gain and high capital gain generates a low yield. For your investment to be the most profitable, you should try to balance these two revenues.

Committing to the responsibilities of a rental is the first step towards getting that lucrative real estate site. The next major step is getting financed. Most people looking to invest in a rental property don't have the ready cash for a down payment. There are a multitude of means you can pursue to get financing.

Residential financing is different from commercial financing because of the nature of the business. The profit is not expected to be in the hundred thousands or millions and the mortgage terms are usually long term. This creates diversity in the market, allowing you to have greater control over payment options, interest options and term length options. Additionally, if you own a home, you can secure a home equity loan to cover your down payment.
As a residential investor, you have the potential to turn a nice profit. Your success depends on how much time and effort you are willing to commit to the project as well as how you secure your finances. If you manage these things correctly, the likelihood of your success improves.
About the Author
Many people search for a source of income that is steady as well as lucrative. In some cases, residential investment properties are the solution for alternative revenues. At KISCL, you can find tips for getting your investment working for you. http://www.kiscl.com
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