Investing in rental property can be a great way to invest over time. Listed below are some reasons why rental property can be a great investment.
1. Other Peoples Money (OPM)- You don't have to invest 100% of your money into property. You can purchase property using leverage. Put some money down and borrow the rest. This will increase your returns. OPM are paying the debt for you over time. This increases your net worth. Rentals allow you to invest bigger than you could with stocks or other investments.
2. Different levels of involvement - You can become a landlord, manage your property yourself, flip properties, loan money to others, invest in small properties or big projects. Or not. Lots of ways to be involved indirectly too. There are management companies who can take of your property for a hands off approach and deal scouting, to name a few.
3. Control your investment outcome - You are not dependent on others to analyse and pick your strategies. You pick the property and influence its performance. You can tweek/change variables to suit your market area.
4. Fairly stable over time- Real Estate will always be around- People always need a place to live. Economic forces can work in your favor if individuals struggle to qualify for mortgages due to high interest rates or high debt levels. Maintaining a property in great condition will ensure its rentability.
5. There is a lot of variety - Single family homes, multi-family, small and large apartments, commercial property, land, etc. There is variety within those categories too-older, newer, smaller, etc.
6. It's simple - It's not easy, but it is simple. Buy property and receive rent. Lots of websites, books, podcasts to learn from. It helps to have an analytical mind somewhat, but no degree in finance, business or accounting is required.
7. 4 profit centers - These 4 areas are working for you. Compare with other investments.
- Cash Flow
- Loan pay down
- Tax benefits
8. You don't have to be present - It's a passive investment/business. You won't be working 40hr/wk to maintain this investment, unless you want to make real estate investing your sole work. Develop systems to maintain your property, list and rent, repairs etc, that will greatly reduce the amount of time you spend with your rental unit(s).
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