Investing in rental properties has become more accessible with the advent of online platforms. These platforms offer various tools and services to help investors purchase, manage, and profit from rental properties. Here’s a comprehensive guide on how to buy rental property online, including the best platforms and strategies.
Best Platforms for Buying Rental Property Online
1. Arrived
Overview: Arrived allows investors to easily invest in rental homes and vacation rentals with minimal upfront costs. The platform is open to U.S. citizens or residents above the age of 18, and you do not need to be an accredited investor to participate.Key Features:
- Investment Range: Invest anywhere from $100 to approximately $20,000 per house 1.
- Property Types: Offers Single Family Residences and Vacation Rentals 2.
- Returns: Investors can earn returns through monthly dividends from rental income and property appreciation at the end of the investment period 3.
- Historical Returns: Estimated annual returns range from 6% to 15%, depending on leverage and property type 4.
Benefits:
- Accessibility: Low minimum investment makes it accessible for new investors 5.
- Passive Income: Monthly dividends provide a steady income stream 6.
2. Roofstock
Overview: Roofstock is a data-driven platform focused on the single-family rental (SFR) sector. It offers a comprehensive suite of services for acquiring, managing, and selling rental properties.Key Features:
- Data and Analytics: Utilizes proprietary data and U.S. Census Bureau data for investment decisions 7.
- Investment Options: Investors can structure separately managed accounts or invest in Roofstock-managed funds 8.
- Efficiency: Provides on-demand technology and services for efficient property management 9.
Benefits:
- Precision and Speed: Allows for more precise and efficient property management compared to traditional methods 9.
- Institutional Access: Offers multiple ways for institutional investors to access the SFR asset class 10.
3. Mashvisor
Overview: Mashvisor is a leading platform for real estate investment property searches, offering a variety of tools and educational resources.Key Features:
- Investment Property Calculator: Automatically compares and analyzes different properties 11.
- Real Estate Heatmap: Helps identify the most lucrative areas for investment 12.
- Educational Resources: Provides tutorial videos, blog posts, and a real estate podcast 13.
Benefits:
- Comprehensive Search: Access to MLS listings and off-market properties, including foreclosures and short sales 14.
- Educational Support: Extensive resources to help investors make informed decisions 13.
Strategies for Buying Rental Property Online
1. Financing Options
Traditional Mortgages: Financing a rental property works differently than a primary residence mortgage. It often requires a larger down payment and higher interest rates 15.
No Money Down: Strategies like house hacking, lease option agreements, and assumable mortgages can help investors buy properties with little to no upfront costs 16.
2. Evaluating Properties
Market Research: Consider factors like job and population growth, rental rates, and vacancy trends when selecting a market 17.
Property Analysis: Evaluate specific properties based on their condition, maintenance costs, and tenant occupancy status 18.
3. Managing Properties
DIY Management: Being a hands-on landlord requires knowledge of tenant laws and property maintenance 19.
Property Management Services: Hiring a property manager can be costly but helps with maintenance, rent collection, and tenant management 20.
4. Legal and Tax Considerations
LLC Formation: Creating an LLC for your rental property business can limit legal liability and offer tax advantages 21.
Tax Deductions: Rental property owners are entitled to several tax deductions, including mortgage interest and property taxes 22.
How To Invest Small Amount In Real Estate
Investing small amounts in real estate has become increasingly accessible through various platforms and investment vehicles. Here are some options to consider:
- Real Estate Crowdfunding Platforms: These platforms allow individuals to invest small amounts in real estate projects alongside other investors. With a peer-to-peer (P2P) platform, investors can select specific deals to invest in, providing an opportunity to diversify a relatively small amount of money across different projects. Real estate crowdfunding platforms have been around for a few years and offer a wide variety of investment opportunities 1.
- Real Estate Investment Trusts (REITs): REITs are companies that own, operate, or finance income-generating real estate. Investing in REITs allows individuals to gain exposure to real estate without owning properties directly. REITs are similar to mutual funds and provide an opportunity to invest in a diversified portfolio of real estate assets. Some platforms enable investors to buy shares in REITs with small amounts of money 2.
- Real Estate Crowdfunding: This relatively new entry into real estate investing allows individuals to invest smaller amounts of money alongside a group of other investors. Crowdfunded investments can be in the form of rental properties or loans to other real estate investors. Real estate crowdfunding provides an opportunity to invest in larger multi-unit properties or provide loans to real estate investors 3.
- Real Estate Loans through Peerstreet: Peerstreet enables investors to invest in real estate loans, mainly for fix-and-flip deals, with small amounts of money. This platform allows individuals to participate in real estate investments with as little as $100 1.
- Real Estate Themed ETFs: Investing in a real estate-themed exchange-traded fund (ETF) can be a smart move for those looking to diversify their investments. ETFs like Vanguards VNQ invest in stocks issued by real estate investment trusts (REITs) that purchase various types of properties, providing exposure to the real estate sector 2.
These options provide avenues for individuals to invest small amounts of money in real estate, offering opportunities for diversification and potential returns without the need for significant capital.
Conclusion
Buying rental property online is a viable and increasingly popular investment strategy. Platforms like Arrived, Roofstock, and Mashvisor provide the tools and resources needed to make informed investment decisions. By understanding financing options, evaluating properties, and managing investments effectively, you can build a profitable rental property portfolio.
