Income property is property bought or developed to earn income through renting, leasing or price appreciation. (thanks Investopedia). These can be either residential (referred to as non-owner occupied) or commercial. Be sure to research mortgage options with a trusted lender for more detail on the difference in other costs associated with “non-owner occupied” properties. These are sometimes considered a higher risk for lenders.
Investing in real estate can be a great money maker, but income properties require a lot of research and planning. The biggest consideration is how much time, money and/or energy you are willing to put into your investment. Being a real estate investor also requires being honest with yourself about what kind of investment you can make, what kind of landlord you want to be, and how much time and effort you’re willing to put into your investment. Here are 4 of the most common types of income properties that I recommend for new investors.
Secondary Suites
This is called many different things based off the relationship of the suite to the principle dwelling – sometimes called “Granny Flat”, “Basement Suite”, “Garage Apartment”, “Guesthouse” or other. This is a great way to make income without having to purchase a second property. Check out the zoning enforcement for County of San Diego Second Dwelling Unit Ordinance for the laws governing a legal apartment. This is also a possible way to add value to your home when upgrades are required to create a legal income suite. Bottom line is you are make money from renters and add value from renovations all in one, but a secondary suite isn’t for everyone.
Student Rentals
We are blessed to live in America’s Finest City, and with that comes many people from all around, including a large amount of students. This is an easy way to supplement your mortgage and can easily be a one room rental situation where often times people choose to leave the room furnished for easy boarding and move out. This option also comes with much turnover, so be ready to potentially have someone different in your home every September. Check out these student rental pros and cons for more info to help you decide if this is the right type of income property for you.
Vacation Rentals
Sites like VRBO, airbnb have made renting out a vacation property one of the easiest and cost efficient ways to make money. You decide what to rent (whole house, secondary suite or room), who to rent to and for how much. This way you can enjoy your property when and how you want to! This situation can also garner a high turn over rate and has an added risk of being empty for longer periods of time depending on where you live. Make sure you’ve considered the location, along with the seasonal popularity, and have a strong understanding of what you can afford when purchasing a property with this as it’s primary use.
Income properties are not for everyone and do require a good amount of diligence and patience, but in areas such as San Diego with its plethora of tourists, students and renters, it is an easy way to make extra money. Search now by street name, neighborhood, school, city or zip code.
