How to Maximise Returns on Investment When Buying a Rental Property

Real estate investment has proven over time to always been a viable investment. Once the decision to invest in real estate has been made, the first question that burdens a lot of beginner real estate investors is how to maximise returns on investment when buying a rental property.

Given real estate investments has proven to be a great way to generate and long term and short term return, it is important to state that not all properties are created equal. Hence, the returns generated from them differ.

For success to be achieved on rental property investments, there are several factors one has to consider when choosing the most profitable rental property. To maximise returns on your rental property, it is advisable to pay attention to a few key factors. Below are a few of these factors: 

1. Invest in top Housing Market

Location; this is the most important factor one should consider when investing in the property market. The location is which a property is situated in would ultimately affect the rate of returns on a real estate investment. 

For returns to be maximized on investment, the location should be one that has an affordable home value, positive population growth, and strong economic growth. It is important to state that the location of a property applies to both the neighbourhood and the city where you choose to invest. 

2. Conduct Investment Property Analysis

The reason you have decided to invest in real estate is to make money, right? So how then do you determine what property would make you money when purchasing? To determine this, you would have to carry out an “investment property analysis”.

 This cannot be overemphasised; there are metrics in real estate, which help estimate the returns on investment which you are to expect for a rental property. Thus, it is imperative to learn to understand and calculate these metrics to ensure you are investing in positive cash flow. 

3. Focus on the Best Property Type

Another important factor that influences the profit made with real estate is the property type. Several factors determine the most profitable type of rental property. Real estate market and the rental strategy which you plan to implement are some of the most important factors.

As stated earlier, the location of your property influences the price of the property and rental income. What this means, in essence, is that in different markets, different property types bring the highest return, with regards to both cash on cash return and cap rate. These property types could range from single-family homes, terraces, apartments, multi-family homes, etc.

4. Ensure to pay the right property price

Rental income or cash flow, on the one hand, and the cash investment or the property price, on the other hand, are two metrics used to calculate returns investing in real estate. What this means is that to maximise the rate return on your investment, it is essential to pay the lowest possible price when buying a rental property. It is imperative to state that the property price factors in both the down payment and the monthly mortgage payments, which are the most sizeable expenses for an investor in rental properties. 

As a real estate investor, you can decide to buy an income property on your own based on your skills and product knowledge. But in doing this, you need to conduct comparative market analysis to ascertain the fair market value of the property that you are planning to purchase.



In conclusion, it is only natural that all rental property investors seek to increase their rental income as much as they can. If you are a rental property investor, you must equip yourself with the knowledge of how to maximise the profitability of rental property investment.


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