For the past few years, a lot of investors have considered rental properties as a lucrative way to generate passive income. Aside from that, here are some the reasons that would convince you to invest in a rental property as well.
1. You Are the Boss of Your Source of Income
The moment you decide to invest in a rental property, then you’re on your way to becoming your own boss. Basically, in this form of investment, you’ll be the one to determine what property you’d like to invest in, what tenant you would rent to, how much you’re going to charge, and most importantly, how you’ll manage and maintain the property to have a steady flow of income.
This is perfect for those who are getting tired of being bossed around. Likewise, since you’ll be your own boss you are free to do whatever you want as long as it won’t have a negative outcome for your property.
2. The Property Value Growth
Since you’re also the property owner, you’ll stand to benefit from an increase in the property value over time. This can be the result of the changing demands within the area your property is located– it doesn’t matter if your property has undergone changes or not, you’ll still be part of this.
However, do keep in mind that this is a variable thing. It would greatly depend on where your property is located. Wherein, in some areas the value of your property would significantly rise, especially if the demand for rental properties keeps on increasing. You should keep in mind that in other areas it would probably stay sluggish. According to experts, the value growth holds pace with inflation. What does this indicate? If you are situated in an area that is above average, then there’s a great possibility that you’ll be able to beat inflation, while being in a stagnant area beating inflation may seem like a battle.
3. You’ll Always Have Money in Your Pocket
Considering the fact that you’ll be investing in an income property that would be occupied by other people, and then you’ll receive monthly income. Even after deducting the needed cost for taxes, repairs, and maintenance you’ll still have enough for yourself. This is also why more and more people are getting interested in rental property investment. As long as you keep your rental property in good condition, you’ll be able to enjoy a steady cash flow every month.
4. Potential Appreciation of a Highly Leveraged Asset
If you think about it, when it comes to rental property investment, it’s possible to only release a small amount of money and borrow the rest– usually four to twenty times more, depending on how much you agreed with the lender. Likewise, if you purchase a property using more debt than equity, then your purchase would be tagged as “highly leveraged.” This would clearly indicate that after a decade the value of your property would increase. You’ll be turning your small investment into a large appreciation profit by simply utilizing leverage.
5. You Can Influence Its Performance
Considering the fact that real estate is a tangible asset, you’re allowed to do anything on your property in order to increase its value or improve its performance. Examples of these activities include improving the exterior, replacing the leaky proof, repainting, and doing upgrades. Since you’re a rental owner, you’ll also have full control on the performance of your property. No one would dictate or limit you on what you should and should not do.
A lot of people, especially in the way of the mortgage crisis, have always thought of this, “would it really be practical to buy a rental property?” The answer is yes. As long as you know how to manage your property, rest assured that you’ll be able to generate passive income with ease.
That means you have to find ways to minimize turnover, decrease vacancy, utilize late fees, and incorporating additional services whenever it’s necessary. Likewise, just like what has been mentioned earlier, by being a landlord, you’ll have the perk of being able to decide how involved you should be in your job. You could either be a full-time rental property owner who will take care of everything, or a part-time property owner who lets a property manager handle all the dirty work.