There is no doubt about it, investment properties involving long term rentals are known to be a safe investment. Purchasing a property and finding a tenant to pay monthly rental fees to you, is something that more and more people are exploring. Long term rentals are known to be an appreciating, cash flowing asset that can create a passive income for you or your family. 

When you are looking to manage an income property, it is important to secure a mortgage that will be manageable for you, maintain a budget for operating costs, and secure reliable tenants. These are a few things to think about prior to purchasing a long term rental. However, if managed properly, and you are well prepared with the help of a Realtor®, an investment property can bring you considerable financial rewards. 

Buy, Renovate, Rent, Refinance, Repeat. This is an investment strategy that involves flipping an old and used property into something habitable, renting it out, following with refinancing this property in order to fund your next investment property.

Buy:  This is the most crucial step of the BRRRR method. This strategy relies on you buying a property that may not be most appealing house on the street. You want to buy a property that you can calculate the finishing value after repairs. Typically homes in worse conditions, are cheaper to purchase.

Renovate: Since you are buying a property that needs a facelift, it may require some labour in making this home rentable or up to code. When renovating, you want to make the property safe, sound, and aesthetically pleasing, in order to prepare for renters.

Renting: Determine a rental rate for your property based on the current market and find suitable tenants to rent the home.

Refinance: You want to convert your current home equity into cash. By renovating and generating a cash flow, your current property will increase in value. This will allow you to refinance the home, by taking out a larger mortgage. 

Reinvest: Use this new and higher equity cash to purchase your next income property!

REPEAT!

Investors are learning that in today's market, short term rentals are proving themselves to be not only sustainable, but providing a high cash flow. A short term rental is described as a fully furnished, self contained property, that is rented out for a short period of time. This could include monthly stays, right up to nightly stays. 

Things like Airbnb® or VRBO®, are just two examples of short term rental income, that have proven to be extremely lucrative to Real Estate investors. Investors are using these short term rentals to maximize on the monthly income that it could allow. Rather than a specific monthly income for tenants, short term rentals typically have a nightly rate, which is easily adjustable. 

When purchasing a short term rental, it is important to highlight that although the cashflow may be significantly higher than a long term rental, there may be more upfront and ongoing expenses. This could include furnishings, utilities, replacing and restocking. It is also important to note that short term rentals are susceptible to seasonality, leading to higher guest turnover and increased prices during the high season, and lower turnover occupancy rates and prices during the low season. Lastly, it is crucial to emphasize location. Ask your Realtor® where is the prime location for short term rentals.