If you want additional income, real estate investment may be for you. Here’s what to do.
If you’ve been thinking about how to make additional income, your best bet may be to begin investing in real estate. It’s one of the safest ways to build your wealth and watch your equity grow, and I’ve been doing it for over a decade.
When investing, an important thing to look at is cap rates. A cap rate indicates how much you should expect an investment to make. The higher the cap rate, the better the investment. To find this number, you multiply rent by 12 and divide that number by the price of the property. In San Diego, the cap rate typically comes in at around 4% to 5%.
“The higher the cap rate, the better the investment.”
Another important number, however, is the projected cap rate. In some areas, rents are currently below market value. If you want a great investment, you can analyze the building itself. Properties with below-market rent typically have some repairs that need to be done. We can try to buy these properties when they’re vacant or give tenants notice to vacate.
Next, we upgrade the property, market it, and find good tenants. Immediately, your cap rate will increase to around 10% to 11%. At this point, you can sell it and make some money or you can keep it for passive income.
If you have any questions or would like more information about real estate investment, feel free to reach out to me. I look forward to hearing from you soon.
