What most people do not know is that rental properties can be an exceptional investment opportunity. Although it may seem tough at first, it may not be as challenging as you may think becoming a real estate investor. There are often plenty of misconceptions about how one can make money out of rentals and the risks that come with it.

And while purchasing an investment property to earn rental income can be quite risky, the opportunities outweigh the risks. But first of all, you need to determine if you are ready to be a landlord with a broad array of skills, that don’t end with just simply understanding basic tenant law or being able to fix a leaky faucet.

For a successful rental investment, the first thing you need to do is find a property in the right location. You would not want to be stuck in an investment where the property continues to decline in value instead of gaining a stable foothold in the real estate market. An area with a growing population with solid revitalization plan from the local government is often a good sign for an excellent investment opportunity in rental properties. Experts recommend that when looking for a rental investment that will earn you profits along the way, you need to consider the following:

— A location with low property taxes
— A decent school district
— Plenty of amenities including parks, malls, restaurants, and movie theaters among others

Furthermore, a locality with minimal crime rates, easy access to public transportation, and a developing job market could mean a bigger pool of potential renters for your property.

Once you have an idea about where to look for a property, the last you would want to have is a fixer upper that would cost you more just to maintain instead of earning the profit you were expecting. It is always a tempting proposition to look for a bargain house that you can convert into a rental property. But on the other hand, that can be a bad idea especially if it is your first property.

Unless, you are DIY guy with skills on large scale home improvements or you know a reliable contractor that can do a cheap but quality job, fixer uppers might just not be for you. There is a big chance that you will end up paying too much to renovate so you can attract potential renters to your property. What you need to do is find a house that is already priced below the market and needs only minor repairs. This way, you can further increase your profit margin instead of putting all your money on unnecessary repairs.

When it comes to rental investment, you always need to weigh the risks versus the rewards. Just like in most of the financial decisions you make, you need to determine if the reward is worth the risks involved in your investment. If not, you can always look for another property that can actually make money for you.