When Sandy real estate investors ask when they’ll begin to see ROI on their rental properties, the answer is usually pretty unsatisfactory: It depends.
The speed with which you begin to earn returns will depend on a number of factors. It depends on whether you paid in cash or with a traditional mortgage or if you engaged in some creative and less traditional financing. It depends on the age and type of your rental property. Single-family homes are on a different path towards ROI and cash flow than multi-family units.
It’s frustrating to spend a large amount of money on a property that may not earn you any money for a while.
The pace of your earnings and returns will depend on a number of factors that are specific to you. There are few things to keep in mind as you’re waiting to see a return on your real estate investment.
Real Estate Investing in Sandy Requires Long-Term Thinking
Don’t invest in a rental property thinking you’ll get rich in the first month. That’s not going to happen, and it shouldn’t. Investors are going to earn more in the short and long term when they buy and hold their real estate investments. In Sandy, this is especially the case. Your income property will earn more in a year and even more in five years. In 10 years, your ROI will be even more impressive.
Your real estate investment is going to make you money, especially when you have a reliable tenant in place who is paying rent and taking care of the home. You might not see a profit right now or in the next year or even in the next handful of years.
This is not a bad thing. It doesn’t mean you’ve made a bad investment. Remember that your resident is helping to offset any potential cost to your investment. The longer you’re willing to hold onto that investment, the higher your returns and earnings will be.
Look for ROI in Appreciation and Rising Values
Sandy income property is going to come with stable rents and steady appreciation. Even if you don’t start earning money in the first months that you own a rental property, you’re going to see some cash flow sooner rather than later.
You’ll also see most of your early ROI through appreciation, an increase in equity, and a rising property value. The home’s market value will increase, outpacing its cost when you purchased it. When you mark appreciation as one of your investment goals, you’re going to see ROI pretty quickly.
Influencing ROI with Sandy Investment Property
You’ll earn more money on your investment property faster when it’s well-maintained, modern, and attractive to high quality tenants. One of the best and easiest ways to increase what you earn is by making some cost-effective upgrades. You’ll wait longer to see returns if your kitchen has appliances that are old and deteriorating. Offer a rental home that is clean, freshly painted, updated, and shows well.
If your home is new and already in great condition, you won’t need to upgrade much of it before putting it on the rental market. During tenant turnover periods, you can increase the value of your income property and your ROI by replacing floors, installing new appliances, and making cost-effective improvements. When you can raise your rent, you’ll increase your short term income and your long term return on investment.
If you’d like to talk more about the investment potential of your specific property, please contact us at Safeguard Property Management. Safeguard is recognized as a leader in Salt Lake City property management. We provide residential rental management services to owners of single-family homes, townhouses, condos and duplexes throughout Salt Lake County and the northern portion of Utah County.