Have some money sitting in the bank and trying to figure out how best to invest it? It may be time to consider getting into real estate investing. Read on to find out about the benefits of rental properties to learn why.
Generate Passive Income
Rental properties provide landlords with a reliable source of passive income. Some of the money collected from tenants will inevitably have to be put into maintenance, repairs, and renovations, but smart investors willing to put in the work to keep their properties looking great should have no trouble generating extra income through renting.
Ensuring an adequate cash flow from a property requires some leg work. Buyers need to factor in all the expenses associated with property maintenance and the income from rent and use these numbers to decide whether the property will provide consistent income. Those looking for an easier alternative can also work with real estate investment firms like National Realty Investment Advisors.
Flexibility to Deal with Market Changes
Buyers who plan to purchase properties then sell them after they appreciate without renting them out in the intervening time will be at the whim of the local real estate markets. If the market takes a downturn, they’ll be left sitting with a depreciating asset while they wait for things to improve or, even worse, having to sell at a loss if they need the money immediately. Planning to rent out the property offers more flexibility since it will still generate income in the intervening time, making it possible for property owners to hold onto their investments until the market makes a comeback.
Property appreciation varies depending on the local real estate market, but most residential properties do appreciate in value over time. Renting out an apartment building or a single- or multiple-family home doesn’t just generate rental income. However, it also helps when investors keep the property in good shape while it appreciates. Keeping vandals and squatters out and ensuring that maintenance issues don’t go unnoticed help landlords sell for a hefty profit when the time is right.
Diversification of Assets
Most serious real estate investors also own stocks, bonds, and other financial assets. Purchasing rental properties can help them diversify their portfolios, providing an extra layer of protection against market volatility. Residential properties are considered a very low-risk, long-term investment, so they’re good for investors who want to save for retirement or other long-term goals.
Option to Move into the Home
Buying a single-family home to use as a rental property also gives property owners the option to move back in if they want to in the future. They have to respect the terms of any current tenants leases, but beyond that, it’s perfectly fine to move back into the home for financial or personal reasons or to allow family members or friends good rental terms.
The Bottom Line
Getting started investing in real estate can be intimidating, but it’s worth taking the time to research local markets and trends. Rental properties are low-risk assets that also provide an ongoing cash flow in the form of monthly rent, which makes them an excellent option for just about any investor.