Investment in rental property has proven to be a successful way to increase your net worth, generate a continuous flow of income, and increase the value of your financial portfolio. And while most investors find rental properties a worthwhile investment, you can expect that you may face some problems.

Either apartment buildings or homes can be used as an investment in rental property. Apartment buildings can be more difficult to finance, require larger down payments, and generally don't appreciate as fast as single family homes. Because of this, most new investors and small scale investors prefer to purchase single family or duplex homes rather than large apartment complexes.

Investment in rental property starts with locating the ideal property to rent. Two factors to keep in mind are the selling price of the property and how much you can charge for rent. Ideally, the amount of the mortgage would be less than the rent. There are times when long term home appreciation is more important than the profit you can make on a monthly basis; this is called "negative cash flow", but the savvy investor tries to minimize this as much as possible.

One of the least enjoyable aspects of investment in rental property is locating good tenants for your property. Nearly all investors hate this part of the investment game. Although there are mostly good people out there who will prove to be an asset to your investment, you are still likely to find renters who will not pay on time, or at all, and those who will destroy your investment property.

A property management company that can help you manage you rental property can be invaluable when it comes to locating suitable tenants. They can do all the preliminary background checks to qualify tenants and save you the time and trouble. However, this method comes with its own set of positives and negatives. While a professional property manager can be very helpful, the cost of the service will take away from the monthly income generated on your property.

It is preferable to invest in rental properties located in nearby areas. The proximity will permit you to supervise the property on a regular basis and of course you will be nearby in the event of an emergency. Exercise caution when looking at distant properties and do so only after you have thoroughly investigated local properties.

Investment in rental property can be a worthwhile path to meeting your financial goals and achieving wealth. However, it does take time, requires a financial investment, and can involve a lot of work. For the best outcome, always follow a carefully-developed plan and invest wisely.