Here’s how you can make a long-term passive income in real estate.

Are you curious about how to create sustainable investment income during this unsteady economic market? The answer may be to invest in real estate rental properties, specifically single-family homes. I'm not a financial expert, and I certainly don't have all the answers, but I've been investing in real estate for over 30 years in every kind of economy.

Right now is a fantastic opportunity to start investing in real estate, despite rising mortgage interest rates and rising home prices. Why? Because single-family homes are recession-proof! Everyone always needs a place to live. Recently, increased inflation, combined with a short supply of homes, has caused rental rates to skyrocket, and our local Richmond area rental rates have increased 22% just over the last two years.

Additionally, a larger proportion of millennial and Gen Z populations are renting, which means demand for rental housing has also increased dramatically. I'm not talking about buying an apartment building or about renovating or flipping houses. That's a completely separate investment strategy. The easiest and most effective long-term real estate investment strategy is purchasing smaller, single-family homes in good school districts.

“Now is a fantastic opportunity to get started investing in real estate.”

The goal is to eventually have a paid off, appreciating asset with constantly increasing cash flow. So here are some basics about getting started investing in real estate: We suggest a 20% to 25% down payment as a second home since mortgages require this. If possible, we suggest getting a 15-year fixed-rate mortgage. Again, the key here is to have a fixed monthly payment on the property and to pay it off as quickly as possible.

That way, when rental rates increase every year, your expenses are mostly the same and you get to pocket the extra spread as profit. It's important to focus on purchasing properties where the numbers work for long-term profit growth. The current mortgage interest rate or current home prices is not that important because you want positive cash flow year over year.

This is why real estate is still a lucrative investment, even as home prices appreciate and mortgage rates go up. The sooner you can invest, the more money you will make in the long term. If you would like a more in-depth discussion on how to get started investing in real estate, contact our team today. We have several seasoned investors, including myself, that will talk you through options and help you put a plan together.

You can start creating a long-term passive income plan. As always, if you have questions about this topic or anything real estate related, call or email me. I’m here to help. Remember—it's not the market, it's the marketing that makes the difference!