Though purchasing rental properties may not be the first thing that comes to mind when you hear “easy investment”, perhaps it should be. Why? Investing in rental properties comes with many advantages that can’t be found with other types of investments. They provide many tax advantages, offer some variety, can be purchased using borrowed funds, and, if you partner with an experienced property management company, can require little involvement from you, the investor. Here are six reasons that purchasing rental properties is a great choice for today’s real estate investors.
1. People Will Always Need Places to Live
Unlike other types of investments (think stocks and bonds), people will always need places to live. And, if people can't or don't want to buy, they'll be looking for rentals. Investing in something that is always high in demand will inevitably be good for your bottom line, especially if you intend to purchase multiple rental investment properties. When considering properties to purchase, do some research. If you're considering investing in real estate out of your area, do some digging into the demographical information of that area. Are there a lot of renters? What are the taxes like? This information will help you make sound decisions before finalizing purchases. And, as we said in a previous article, millennials currently make up the largest percentage of renters in the US, so you already have some insider knowledge that will allow you to update your properties to meet their preferences.
2. You can Borrow Money to Invest in Real Estate
One of the greatest things about investing in rental properties is that you're able to borrow money to make the purchase. Whether you borrow from the bank or someone you know, you're able to obtain a loan, proceed with your purchase, and begin bringing in rental income that will in turn cover (and ideally exceed) your monthly loan, interest, and tax payments. Needing less money up front and turning a profit on your properties will then allow you to continue making purchases, thus increasing the size value of your investment portfolio.
3. Rental Properties Offer Variety
Another great thing about investing in rental properties is the variety of options it offers. You can invest in single-family homes, condos, townhouses, whatever suits your fancy. You can also invest in inexpensive homes, foreclosures, fixer-uppers, turnkey homes - really, the options are endless. Of course, if you're not one for variety, you can easily stick to the type of home you prefer. But, if you like to keep things interesting, you've got the option to try as many types of homes in as many different areas as you'd like. However, it is always a good idea to do your homework and speak with local property management and real estate professionals to ensure you're making good decisions before that love for variety ends up causing you to purchase an unpopular type of home in an undesirable area of town.
4. You can Make Money from Anywhere
Yes, you don't have to be at the NYSE to make money with stocks either, but one of the best things about rental properties is they allow you to be as hands-off as you'd like to be. Of course, being hands-off requires finding a trusted property management company to do the legwork and care for the property in your absence. But do you really want to be bothered with all of that anyway? Probably not - the idea of sitting back and letting the investment do the work for you sounds a lot better.
5. You Have Access to Knowledgeable Resources
If you're new to investing in a particular area (or new to investing altogether), there are tons of available resources on real estate investing. Not only are there blogs, podcasts, news articles, webinars, and pretty much anything else you can think of, but there are also property management and real estate experts who are readily available to answer questions. Use these resources to your advantage - if you educate yourself on all aspects of property investing, the process of becoming a rental property owner can be pretty simple and will become second nature the more you do it.
6. Numerous Ways to Earn a Profit
Lastly, there are so many ways to maximize your profit with rental property investments. The tax advantages alone are attractive - you can deduct quite a few things related to your rental property. In addition, rental properties appreciate in value, can bring in a positive cash flow, and you have someone sending you a payment every month that exceeds your monthly PITI payment which is essentially paying down your loan and then some. Not a bad deal, right?
There are of course many more advantages to investing in real estate and, as with anything, probably a few downsides as well depending on your specific situation. However, any downsides can usually be avoided by doing your due diligence to ensure you’re making good decisions throughout your investment journey. Overall, though, rental property investments can earn you the return on investment you deserve with relatively little personal involvement and complication.
At Sweyer Property Management, we have local experts available who can not only assist you in choosing a rental investment property to purchase but can also run the numbers with you to figure out what your monthly profit might be. And, once you've made your purchase, they can assist you with every aspect of your property from getting it on the market to signing a lease.
Are you searching for a property management partner who has a proven record of success? Visit our website today to obtain a free report on how much your investment property might rent for or reach out to our new business development director at 910.239.1338.