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Real Estate Investor Earnings: A Yearly Overview

Line drawing of house containing an upward trending graph in front of businessperson holding out their hands. Real estate investing can be an excellent way to build wealth and achieve financial independence. However, one of the biggest questions on the minds of many potential investors is, how much money do real estate investors make annually? The answer to that question can vary depending on several factors. Still, in this article, we will explore some of the factors that can impact real estate investor income and provide pro tips on maximizing rental income.

Factors that Impact Investor Income

When looking at the average investor income, many factors can have an effect. These include:

  • Location – the location of a rental property can have an impact on its income potential. Properties in high-demand areas, such as those near good schools, transportation links, and amenities, will usually have higher rental incomes.
  • Type of Property – whether a single-family rental property or an apartment building can also affect potential income. Single-family properties are simpler to rent and maintain, often generating higher rental returns than apartments.
  • Investment Size – taking the investment’s size into consideration is vital when talking about predicting income. The more properties a rental property owner owns, the higher their chance of generating meaningful rental income.
  • Market Conditions – market conditions around a rental property can also affect income potential. Where there is a high demand, rents have a propensity to be higher, but the opposite is true where there is a low demand.
  • Management Style – managing a rental property can also affect profits. Self-management may seem more cost-effective at first, but the truth is that hiring a professional management company can greatly reduce headaches and improve returns.
  • Investor Experience and Knowledge – an investor’s experience and knowledge can significantly impact their earning potential. Investors who hold extensive tenure in the industry and have established a strong network and understanding of the market tend to do better than those who are not involved in investor communities and education. Continuing education and being current on industry developments could also play a role in helping investors stay ahead of their counterparts.

Average Investor Income

According to national data, the average income for real estate investors in the United States is about $140,000 annually. Of course, that number varies widely from state to state and even from market to market. For example, the average real estate investor income in North Carolina is about $107,000, while in New York, it is $161,000. Each state’s investor income can range from hundreds of dollars to well above average.

For single-family rental property owners, you can utilize several useful metrics to determine your rental income based on the type and number of properties you own. For example, the 1% rule is a way to determine target rental income. This rule says that the amount grossed through monthly rent should be at least 1% of the final property purchase price. For example, a $200,000 property should rent for at least $2,000 monthly. You would then need to subtract monthly expenses to calculate the expected net profit.

Maximizing Rental Income

Once you’ve reached a point of comfort with the factors that influence real estate income, several pro tips help maximize your rental property profits.

  1. Do your due diligence and research the rental market in your area. Knowing the going rates for rent and expenses helps an investor determine the best investment strategies for your market.
  2. Your rental property should be priced correctly. Your rental rate should only cover all property expenses, including mortgage payments, taxes, insurance, and maintenance. To generate income, your rate will need to exceed your costs.
  3. Invest in single-family rental property. This can be an excellent way for investors to build long-term wealth and achieve financial independence. Single-family rentals provide consistent cash flow and benefit from appreciation over time.
  4. It is critical to remember that rental property ownership requires diligence and hard work. Rental property owners should always be willing to learn new skills and strategies to expand their income.

 

Contact Real Property Management of the High Plains to learn more about earning a passive income and achieving financial freedom through real estate investments in Bushland and the surrounding area. Our experts can offer competent and approachable advice on property management and real estate investment matters. Call us at 806-553-7914.

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