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Back in March of 2017, Roger Vincent reported that “The L.A. area ranked No. 1 in North America in a survey of global real estate investors who have a combined total of $1.7 trillion to spend on property in 2017,” so while that accounts for the continued Los Angeles real estate bubble it doesn’t account for why so many people are still discouraged or disapproving of real estate as an investment strategy. I think the most significant factor standing between people who want to take the plunge and those who have actually done it is the ‘How’ associated with all of it.  

Given the varied approaches, it’s easy to become overwhelmed or confused about your options. How real estate investment actually works versus our commercial ideas of how it works like Fixer Upper, Property Brothers, and HGTV, in general, create a gray area. While in reality, the rental approach may not be as glamorous, it also tends to require less hands-on experience.

Residential Rentals

One of the most traditional approaches to real estate investing is using properties to generate an income with long-term tenants. Owners have the option of taking a more involved role where they also act as the property manager and point person for their tenants, but it’s not required. If you want to own a residential rental, but don’t want to deal with the general upkeep and communication, find a property manager or property management company to handle that aspect of your business. Be sure to find properties with a strong return, don’t overspend on a property and pick good tenants. By making educated decisions and controlling the factors or potential cons that are within your reach, you safeguard yourself and your investment.  

Vacation Rentals

While in the past – residential rental properties were the primary rental investment approach, but along with the rise in vacation homes so too have the options for investing. While weekly rentals are one approach where you can reap the rewards of having access to a home away from home, you can also make a profit on it.

Now sites like VRBO and Airbnb once again revolutionized how we see vacation homes as a real estate venture. In many areas, you can make more on a week-long Airbnb stay than a month of rent. As Mashvisor’s Diala Taneeb highlighted, “Airbnb hosts who rent out their room have reported their income helping them with over 50% of their rent and paying their mortgage. Many Airbnb hosts have expressed making more money through their vacation rental than through traditional leasing.” That being said, vacation rentals also have certain obstacles associated with them as well. More tenants mean more turnover times which require cleaning, handing off keys, etcetera.

When it comes down to it, the more you research, the easier it will be to make a smart investment. You want to be confident in the approach you take and keep in mind that rentals are a long-term commitment, but also a long-term payoff.

This was originally published on Patch.