Investing in real estate is a great option to consider, especially when you look at the long-term perks of becoming a landlord. If you are thinking about your investment opportunities, then it is a great time to learn about the benefits of owning rental properties – as well as potential disadvantages you might encounter along the way.
Benefit #1: Demand for Rental Units
Nationwide, homeownership has dropped as more and more millennials are staying in the rental market into their mid-30’s. At the same time, the baby boomer generation is moving toward rentals instead of homeownership. These trends have opened up many opportunities for investors who are ready to buy the right properties to meet the needs of these growing demographics. Landlords have the advantage as the demand for rentals continues to rise each year.
Benefit #2: Passive Income
As long as the unit is filled and the renters are reliable with their payments, you can enjoy a passive income source. The recurring money is paid from one month to the next, with minimal requirements on your part to maintain this source of income. Keep in mind that you won’t be able to pocket all of the money, because you still have costs for property taxes, repairs, and other maintenance expenses. Before buying a rental property, it is essential to evaluate the potential cash flow by looking at comparable rentals and the anticipated expenses for the property. A real estate expert can help you analyze other rentals in the area, as well as possible costs that will be encountered in the future.
Benefit #3: Financial Flexibility
Some property owners naturally fall into being a landlord because they are ready to move, but the market isn’t quite right for selling a property. If you don’t want to take a loss on the sale, then you might consider bringing in renters so you can hold onto the unit until you can maximize the sale price. Having renters is a great way to build equity over time since the rent payments cover your mortgage. Watch the market and talk to an agent to determine the optimal time for selling your property.
Benefit #4: Increased Property Values
When it comes to real estate, the best successes come when investors are focused on the long-game. Over time, property values increase, especially when you are proactive with maintenance and repair work through the years. If you hold onto the property long enough, eventually the mortgage will be paid in full. Or, you might choose to sell when the market is “just right” – so that you can maximize your ROI and roll the equity into another investment.
Benefit #5: Housing Options
It’s nice to know that your family always has a back-up option if you need to move back into your rental for some reason. If you are facing unexpected financial problems or a job change, then it might make sense to live in your investment property for a while.
Benefit #6: Investment Diversification
Most financial advisors will agree that you shouldn’t put all of your money into one investment. The stock market can be volatile, which is why investors are looking to diversity with hard assets. Even if the stock market crashes, it feels good to know that you put your money into real property. This diversification gives you an extra layer of protection so you can minimize risk in your investments.
Real Estate Advice for Rental Properties
As you read through this list of real estate investment benefits, it can help you decide if it is the right time to move forward on your dream of owning rental units. As you are considering your options, the best thing you can do is consult with an experienced real estate team for local recommendations. Contact us any time to discuss your real estate goals.