News & Blog
Perks of Investing in Rental PropertyNovember 26, 2019
Investing in residential or commercial rental properties has always been an attractive idea. Although this type of investment requires an initial outlay, it's a rewarding solution often associated with high ROI and ongoing passive income.
If you don't believe in the power of real estate investment, here are a few convincing points you should keep in mind.
Ongoing income stream
Before you start investing in real estate, understand the market first. By analyzing the latest trends in the rental industry, you can establish a solid strategy based on your prospective tenants' priorities. For instance, if you want to make rentals attractive to Millennials or Gen Z, you'll need to provide specific amenities in the rental, such as free wifi or laundry facilities. At the same time, older renters are often more concerned about security measures, such as safe neighborhood or carbon monoxide detectors inside the property. Once you've paid attention to these details, you're more likely to receive ongoing passive income from your rental properties.
Another crucial step is to minimize vacancies by choosing quality long-term tenants who will take care of the rental. This means fewer expenses for rental maintenance and advertising.The profit generated from your rental properties can then be used for any side projects or investing more properties.
Net worth boost
A good investment is likely to increase your overall net worth. However, it won't happen overnight. Any real estate investor would agree that building real wealth is a time-consuming process. Along with that, you should understand the risks of potential capital loss.
While property management is a lucrative business, there are also a couple of pitfalls you need to be aware of (such as high competition, lack of experience and accounting skills, etc.) To avoid any of these risks, educate yourself first and follow your well-structured plan.
Because real estate investing is a powerful source for passive income, it might let you become financially independent and retire on rental income. Passive income from real estate is a beneficial solution, but you'll need to set up achievable business goals and systemize your daily tasks to get closer to financial freedom.
The one percent rule
To ensure you're generating positive cash flow, use the 1 Percent Rule which states that the monthly rent should be equal to or greater than 1% of your overall investment.
Do you invest in rental properties? What other perks can you single out? Share your ideas by leaving comments below. We'd love to hear what you think.