Landlord Blog

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Should You Invest In Real Estate Rentals?

Real estate investment comes in many forms and one of them is rentals. This strategy involves looking for tenants to occupy a property and collecting payment for their stay every month. The property can either be residential, commercial, or industrial.

Sounds simple right? Not so fast. Real estate investment involves a lot of money to start and that includes rentals. If you want to be a landlord, you must first understand the advantages of running a rental real estate business to see if it’s the right venture for you. Below are eight reasons why you should rent a property out.

1. Good and steady cash flow

Rentals are a passive source of income. You don’t need to go to work every day to have money flow into your bank account every month. There is one caveat: Some tenants may pay their rent late due to various “reasons”. Make sure that you screen them well for their ability to pay on time before letting them live on your property.

2. You have time to hustle for other means of income

Because owning a rental doesn’t require a lot of maintenance, you can use your spare time to work on other hustles such as a day job, second business, or politics (if you’re a politician). In a nutshell, rental real estate adds up to your monthly earnings.

3. Property value appreciation

As a result of a local population increase and the housing supply remaining low, the value of the properties in an area will rise steadily. The increase may not be significant in the foreseeable future but the home will be expensive in the long term. Yes, you can buy a property in a populous suburb today and expect its value to increase 20% to 40% in 5 to 10 years.

4. You get plenty of leverage

Getting a loan to buy a property that will be rented out has a high rate of approval, especially when a lender’s calculations predict that they can receive a 60% return on investment than a buyer paying full in cash. This is a great advantage if you have no money to buy a house but have the knowledge for being a successful landlord. 

5. Tax benefits

In addition to leverages, you also receive tax benefits from the state where your property is located. Examples of these benefits are little to no tax payment, insurance, property maintenance cost, and mortgage interest cuts.

6. You manage everything directly

Owning a business can be challenging. At times it can also be frustrating, especially if you can’t make decisions without being approved by partners or members of the board. But with real estate rentals, you are your own boss. However, that absolute control also comes at a cost — everything is your responsibility from property hunting to house maintenance.

7. Property security

For those who already have a house with nobody living in it but also won’t sell due to personal reasons, rental real estate is a great way to keep that property secure. You won’t have to worry that the house would be squatted or vandalized.

8. Flexibility of selling

Some real estate investors prefer buying and selling homes to renting them out. The problem with that strategy is the market won’t always favor the seller. As a result, a property might sit unoccupied for a long time, missing a lot of opportunities to generate income.

But if that property were to be rented until market conditions are favorable, the seller will reap profits from the rent and the reselling.

Being a landlord is no easy task. You can have problematic tenants or find challenges in maintaining a property due to being preoccupied with your main career. This is why we suggest tips on how you can be a great landlord below: