It’s hard enough to save up a bundle of money, much less decide how to invest it. As you consider your options, don’t overlook the possibility of becoming a landlord. Developing a real estate portfolio is a time-honored way to build toward financial independence. Review these reasons why rental properties are solid investments to see if they line up with your talents and priorities.
Affordable Beginnings
Buying a modest property shouldn’t devastate your funds, so you’ll be relieved to know that banks are usually happy to help you finance a single-family rental. With a good credit score, you may need to only make a 15 percent down payment. You can get an even better deal if you plan to live on a multifamily property and rent out the other units. Banks feel more comfortable when they know you’ll be managing your units on site. You might even qualify for an FHA loan that requires just 3.5 percent down from you.
Flexible Time Commitment
No doubt about it, owning rental property depends on how well you work with people. You’ll need to find and screen tenants, develop relationships with vendors, act as a handyman, negotiator, counselor, and more. But you can really spend as much or as little time as you want as a landlord. You can enlist your family to help you make improvements on the weekends, or go the other way and delegate as much as possible to a property management company.
Tangible Assets
Some investments seem almost imaginary. You can watch initials bounce all over the stock market or pretend you know the future of bitcoin. But property is a physical asset you can touch, change, or even inhabit. You can decide to put more money into a unit to increase its rent, or just maintain it the way it is. You can sell it after it has appreciated or move in yourself when you retire. You can pass it down to the next generation. It’s satisfying in a way that more conceptual ventures aren’t.
Unlimited Potential
Becoming a landlord isn’t easy. You’ll have to mine research and analyze data to find a good land deal and then crunch numbers to maximize your profit. It’s a steep learning curve and you’ll have to wait years to see a significant return. But real estate promises indefinite passive income if you can keep it rented. And you don’t have to hold your breath that it will explode in value. Instead you can use the cash flow from the first property to invest in more. As
your portfolio diversifies and you assemble a trusted team, your properties will work for you until you’ve steadily built up enough income to quit your day job.
As long as people need places to live, there will be reasons why rental properties are solid investments. As far as gambles go, your odds for success are excellent.
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