How to Generate Monthly Income through Investment in Rental Properties

Real estate can be an incredible asset, especially if you are looking for a steady stream of passive income. Rental properties present property owners with an opportunity to generate extra cash, which can come quite handy, especially if you are a retired person. A well-located and well-maintained two bedroom property can fetch you anything between Rs 15, 000 - Rs 25, 000 per month in any metro. Having said that, it is not very easy to generate a steady income stream through rentals. One needs to plan, work hard and play it right. Given below are some tips that can help you earn decent monthly income through rental properties: Research and crunch numbers before investing in a rental property Contrary to the popular belief, generating income through rentals is not a cake walk, and one needs to be committed to be able to succeed in it. One must research to determine on properties in popular neighbourhoods. You must be able to crunch numbers and evaluate if the investment is financially feasible for you. Also, you must assess your temperament and decide if you can manage the upkeep of aspects such as plumbing, cleaning, painting, etc. Evaluate the rental market in the determined locations When it comes to investing in rental properties, nothing is more important than the location. If you have determined on a specific neighbourhood, then you must research and get an insight into the available amenities and proximity to public transportation. Of course, it is not possible to know everything about the locality, but the more you know, the better for you. For instance, if a new mall or a metro station is coming up near the determined property in the near future, then it will surely have a positive impact on your rental income. Also talk to property owners and real estate agents to understand how properties appreciate in that neighbourhood, and also to know the rentals there. Try to invest in a rental property that is near by When buying property to generate rental income, it is best to buy local. Your job as a landlord will be much easier if you are staying near your rental property. You don't need to do everything yourself, but you will surely be able to save huge on fees of property manager, and this holds true even if you hire labour to upkeep your rental property. The best part is that even if your property is vacant for a few days, you can easily check it often. Do not buy at an exorbitant price The whole purpose of rental income gets lost if you purchase the property at an exorbitant price and have to pay a hefty EMI every month. In order to generate a regular cash flow and income, it is important that you take time and buy a property at a reasonable rate. As a rule of thumb, you should not buy any property for more than 15 times its annual rental value. There may be variations depending on the neighbourhood, type of property and proximity to important amenities, but you must only buy a property that will not cost you more than what you are intending to make through it. Very importantly, do not invest in a very large property. It is better to purchase a 1 bedroom or a 2 bedroom house or apartment, if you are purchasing it with the purpose of renting it out. Smaller properties are easy to rent out and yield better rentals. Last but not the least, keep ample cash reserve and do not depend completely on the monthly rental income. There may be days or months when the property is vacant, and hence you will have to do without the rental income in those months.