While it is possible to make a lot of money from investing in a rental property, it is wise to remember that some investment types make more money than others. There are a lot of different types of landlords who cater specifically for particular markets, and the amount of money earned from their properties depends on the type of property they have invested in. As with any other property, the location and type of property will have a large bearing on the type of tenants it will attract.
There are a number of factors that count in your favour when renting to students. Firstly, the property doesn’t have to be fancy, and extra revenue can be gained by renting out rooms individually. Student accommodation is always in demand in student towns, and often students will vacate the premises during the long summer holiday, which allows landlords time to perform maintenance and repairs to the property. The downside of student rentals is that they can be a rowdy and you may have to deal with complaints from neighbours. They are also not likely to maintain the property very well, which means more work for you. Experts recommend that to get the most of this market, the parents have to co-sign the lease in order to provide some accountability when it comes to damages and rental defaults.
Purchasing a property in a town, city or village that is popular with holidaymakers can certainly add more to the coffers, but this also carries a number of risks. While demand during peak seasons and holidays can be high, your holiday rental could suffer during the off-season months. This means that even if you make a lot of money during season, you will lose money on off season. Maintenance can also be difficult if you live away from the property, and a lot of people choose use property managers to rent out and maintain the property on their behalf – which further erodes the earnings. If you want to do holiday rentals, check out the location very carefully. Some places remain busy for most of the year and can bring good revenues. It is also great to have a holiday escape for your family every year!
Upmarket and corporate rentals
While these can generate a great income, there are drawbacks. Firstly, these properties have to be kept in tip-top shape, and with corporate rentals they often have to be furnished. While corporate rentals can bring huge dividends, companies are often reluctant to sign long term leases, which means that the property may not be occupied all the time. Often residents who rent these homes default on the payments, which can create a big hole in your pocket!
Whichever rental you choose to specialise in, you have to be sure about the market and choose a property in the correct location. Do your homework before buying to make an informed decision!