Be patient with your investment properties. Investing in real estate is not the best way to get rich quick. You’ll build financial stability and amass wealth over the long term instead. If you’d like to hear more, please contact us at Sacramento Delta Property Management.
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How Long Do I Have to Wait to See a Return on My Real Estate Investment?
If you’re like most real estate investors, you decided to invest because you want to make money. It can be a bit off-putting to spend a large amount of money on a Sacramento rental 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. It will depend on how you’ve financed your property, what type of property you own, and what your plans are for it now, in a year, in five years, and in 20 years.
There are few things to keep in mind as you’re waiting to see a return on your real estate investment.
Make Investing a Long Term Strategy
For a while, buying a home and then flipping it was a popular way to immediately earn a lot of money on your investment. That’s not really the case anymore. People are choosing to buy and hold their real estate investments. This means you have to be prepared for the long haul.
Your real estate investment is going to make you money, especially when you have a
reliable resident 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.
That’s okay, because ROI isn’t something that can be measured at the beginning of your investment cycle. You’ve made an investment that a resident is helping to pay for. The longer you’re willing to hold onto that investment, the higher your returns and earnings will be.
Capital Appreciation and Increasing Value
Most investors in Sacramento don’t start earning money in the first months that they own a rental property. Usually, the amount of rent you collect will not exceed the expenses associated with the rental property.
Instead, you’ll earn ROI through capital appreciation. This is the increase of a home’s market value compared to its purchase price or acquisition cost. When you factor appreciation into your investment strategy, you’ll see that it will help you earn the income you’re hoping for as the property increases in value. Sacramento real estate values will increase, and so will your appreciation and ROI.
Increase ROI with Smart Leasing and Property Upgrades
You’ll earn more money on your investment property faster when it’s
well-maintained, modern, and attractive to high quality
residents. 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 40 years old. Make sure the home is clean, painted, and shows well.
If your home is new and already in great condition, don’t spend a lot on upgrades now. To really maximize your investment, you’ll want to wait until you need to begin replacing things such as floors, appliances, and fixtures. Upgrade your property during turnover periods so you can ask for higher rents. This will increase your short term income and your long term return on investment.
Finding qualified residents quickly is your primary goal, and while SHRA offers valuable resources, it’s important to weigh the advantages and disadvantages of limiting your marketing scope.
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910 Florin Road, Suite 100, Sacramento, CA 95831
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Sacramento Delta Property Management, Inc.
