10 Reasons Rental Properties are a Good Investment

[Jorge Vazquez]

BY JORGE VAZQUEZ

10 Reasons Rental Properties are a Good Investment

Everyone wants to retire someday, and a lot of people want to retire early. One of the best ways to achieve retirement goals is to generate cash flow profits by investing in rental properties. That’s why millennials are choosing to invest in real estate above stocks.

So, if you’ve been thinking about investing in real estate, here are 10 reasons rental properties are a good investment.

Related: Cash Flow is King with Real Estate Investing

#1 Rental Properties are a Tangible Asset

When you put money in the stock market, all you get is a digital receipt for the mutual fund or individual stock you purchased. You can’t see or touch your asset. And, you can’t talk to the CEOs of companies in which you have invested, unless you are a zillionaire.

Investing in rental property is the opposite. You can see and touch your investment. And, you can talk to the top person in charge (i.e., CEO), because you are that person.

#2 You’re in Control

When you invest in stocks, bonds, and mutual funds, you’re trusting other people to make the right decisions. Unfortunately, poor decisions are sometimes made, and investors lose a lot of money.

With rental properties, you’re in complete control of your investment. You choose whether to use a management company, which you can hire and fire at will. You can also select the tenants, write the lease agreement, set the rental price, and maintain the property to your standards.

#3 The Ability to Leverage Your Money

Real estate is one of the only investments you can buy without any money, and pay for with other people’s money. Furthermore, real estate can be leveraged to purchase more property and grow your portfolio more quickly.

With that said, we always recommend that clients put money down on properties they purchase and maintain a healthy contingency fund.

Related: How to Pay for Your Kid’s College Education with Real Estate

#4 You Can Hustle for Higher Returns

When you purchase a stock, other people are in charge of generating profits, and you are just along for the ride. With real estate, though, you have numerous opportunities to create appreciation and increase your profits.

Forced appreciation results from adding value to a property, such as renovating it. One way real estate investors can force appreciation is to hire a management company that suggests and implements improvements that force appreciation, resulting in higher property values, higher rental rates, and increased profits.

Related: Increase Your Real Estate Profits – Use A Property Management Company

Experienced real estate investors who invest in multifamily properties have even more options for forcing appreciation, compared to single-family homes. A relatively small change to a multifamily property can add value affecting multiple families, not just a single family, resulting in forcing more appreciation on a per family basis.

Related: 5 Important Reasons to Invest in Multifamily Real Estate

#5 Demand for Homes

There will always be a demand for homes, and a demand for rental property. Although styles come and go, and properties are updated every few years, the demand for a place to live will never go away.

Furthermore, younger generations prefer to be mobile, often choosing to rent over buying a home, which will continue to increase demand for rental properties.

#6 Job Security: Rental Homes Won’t be Automated into Extinction

As we continue making advances in technology, many people are losing their job due to automation. But real estate investors will never be replaced with a computer. Computers aren’t going to own rental properties.

#7 There’s Something for Everyone

There is a great deal of variety in real estate. You can invest in single-family homes, multi-family homes, apartment complexes, office buildings, and several other types of real estate. There are properties for every level of investor, from the novice to the corporate real estate investor.

#8 You Can Live Anywhere

One of the biggest benefits of real estate investing is that the owner can work remotely. Unlike other professions, real estate investors can work and live anywhere, no matter where their properties are located.

Retired investors, especially, like the idea of owning investment real estate in several areas of the world, so they can travel and visit their properties. And, other investors like the freedom to travel and live anywhere, while their rental properties generate monthly cash flow profits.

#9 You Can Get Great Deals

Some people are driven to find great deals, no matter what they are buying. Real estate, whether flipping houses or buying property to rehab and lease to tenants, is perfect for people who live to find the next deal.

The best real estate investors often purchase property well below market value, renovate it, and flip it for a profit.

#10 Different Ways to Profit

In real estate, there are several ways to profit, such as cash flow, appreciation, and tax benefits. Rental property investors allow tenants to pay for their investments while banking monthly profits, and later sell the property for additional profit.

The best investors often combine several methods of generating profits that result in a lifetime of cash flow, and a lucrative inheritance for future generations.