Undoubtedly, rental property is my favorite source of passive income. Of course, wholesaling and flipping properties is enjoyable, the stock market is more fashionable, and tax liens and notes have less tenants. Nonetheless, rental property offers several unique advantages for new investors. Here’s how:
I Can Increase My Profits Through My Own Industriousness
In contrast to many other types of investing, I can improve my results by using my own skills and time. If I wish to raise capital through networking, I can do so. If I wish to carry out property rehab work myself, I can do so instead. If I wish to spend time searching for deals that offer superior returns, I can do so as well. This type of investing puts me in control of my financial future.
I Can Make Money Without Requiring Huge Capital
Rental real estate allows me to boost my returns by borrowing other people’s money. That is to say, I can purchase property without stumping up its’ full market value. This means that I can purchase big properties for much less money than I may require to buy investments like stocks.
There is a Constant Demand
Although the market for property will fluctuate, people will always require a roof over their heads. As a result, this is a safe long term investment, unlike many other new startups or product fads. Moreover, rental property demand will inevitably increase in future, because fewer people are now able to obtain a mortgage.
I Can Personally Oversee My Investments
When it comes to investing my money, I like to know exactly what’s going on. Thankfully, with rental property, I am in charge of everything that happens. I can assess a property prior to purchasing it; make sure that it is in a suitable condition to let; and check that it is properly maintained. Rather than being dependent on the judgements of others, I can enjoy peace of mind by overseeing the investment myself.
Drama Free Returns
While volatile events like the 2007 market crash do occur, long term real estate investors were not as affected as those who were aiming for a quick buck. In addition, many savvy investors actually predicted the 2007 housing collapse, because the property market – by its’ very nature – is prone to rise and fall dramatically every now and again. Experienced investors, who realized the likelihood of this event, were able to cash in by buying low and selling high.
It is a Tried and Tested Model
Wealth acquisition through property ownership is one of the oldest forms of investment, and millions of people have profited from this in years gone by. Nowadays, the trend is continuing, and – according to a 2012 survey conducted by Memphis Invest and BiggerPockets – over twenty-eight million US citizens regard themselves as property investors.
Uncomplicated and Transparent
While there is a learning curve involved, I do believe that rental property is a reasonably straightforward form of investment.
Of course, sometimes there are obstacles involved when it comes to purchasing real estate and finding tenants for it. However, the methods themselves are not particularly hard to master. Furthermore, a huge quantity of training material has been produced on this subject, by people who have succeeded with it. Videos, podcasts, books, forums, blogs, mentorships and networking groups are all available to help you understand the process from start to finish.
Never a Dull Moment
There are multiple options open to you, as far as rental property goes. I might choose to invest in small multifamily houses, properties for single families, office blocks, big multifamily homes, low end, high end, transient or Section Eight properties — to name but a few. Also, within these asset classes, there are smaller properties, bigger properties, properties that are older, newer, shorter, taller, attractive, ugly and so forth. The variety on offer is amazing.
Knowledge is Power
People who invest in stocks and shares have been known to profit from ‘insider knowledge’. This is where they can make money because they know some private information, which allows them to sell or buy at an opportune time. However, stock market investors who do this are frowned upon and sometimes even prosecuted, depending on the scale of the perceived ‘unfair advantage’.
Nonetheless, because I invest in rental property, I am perfectly entitled to use my private knowledge to boost my profits. For example, if I found out that new transport links were going to be introduced to a particular area, I can rush in and purchase real estate before the wider public finds out.
If I discover that a big employer is moving out of a neighborhood, I can sell my properties there before the market reacts. In contrast to stock investing, this is completely ethical and legal in the real estate sector.
Numerous Opportunities to Cash In
A notable advantage of rental real estate investing, in comparison to other types of property investment, is that you can profit from all the main income sources on offer. These include appreciation, cash flow, tax benefits and loan pay downs.
There Are Many Discount Deals to Be Had
My parents always instilled in me the importance of bartering for a good deal. Consequently, one reason why I love rental property investments is that I can locate properties that are priced well below their true market value.
Nothing beats the buzz I get when I find a property worth $200,000 that I can purchase for $160,000. This is the main strategy that I have employed during the last decade to dramatically increase my wealth.
Profit While You Are Doing Something Else
Lastly, I relish the thought of making cash without having to be somewhere at a certain time. That is what wage slaves do, and I don’t want to be like that.
Real estate does require some initial input from you. However, through time, the methods you set up will allow you to delegate much of the process to others. Then, the money will arrive regardless of what you choose to do during the day.