If you’re looking at investment opportunities, you have a lot of options. You’re probably looking for an investment that will provide you with return as well as security. Real estate is one of the oldest and most popular classes of assets. Most people know that real estate can create passive income and be a great long-term investment when the value increases. But there are many other less commonly considered factors that make rental properties a solid investment.
1. You can shop around for a great deal.
If you’re similar to me, and love a good deal, you will likely enjoy property investing. As a buyer, you can shop around, you can haggle, and you can wait for the right moment to purchase below market value. Not only does finding a property that you can attain below value set you up for a good investment, it is also exciting. Getting a great deal can mean building wealth and building it quickly.
2. You can purchase rental properties with leverage.
One bonus to buying a rental property is that you can borrow from the bank, or someone else, for the purchase. You therefore increase your potential for return. This principle is often referred to as leverage. Basically, even if you don’t have the entire purchase price for the property at your disposal, you may still be able to buy it. In comparison to stocks or other investments, you can purchase a larger investment for much less cash up front.
3. You can manage your rental property investment personally.
If you like to be in control and have a hands-on approach with your investments, you’ll enjoy running a rental property. As a property owner, you can be directly responsible for the success of your investment. If you are dedicated, and do your research properly, you can personally analyze before buying, ensure good renting conditions, and keep the place running efficiently. There will always be some risk, but unlike other investment types, you can manage everything hands on with less external conflicts and outside opinions. Unless you want those opinions – again, it’s your call.
4. It’s a business that isn’t going anywhere.
While the real estate market in general has its ups and downs, rental properties will always be in demand. People will always need to live somewhere, and there will always be individuals and families that choose to rent instead of own. As the economy changes and mortgages become increasingly difficult to qualify for, the demand for rentals will only increase., so being a landlord is something that will always be needed.
5. Knowledge is power.
In many industries “insider trading” or using secret information to know when to make a deal, is looked down upon or downright illegal. But when you invest in rental properties, you can leverage any insider information to your advantage, and not only is it legal, it’s considered strategy. Do your research, always pay attention to what’s happening in your region, and listen closely to the market. Is better transportation improving in an area? Is there a new school opening up? Businesses shutting down? In the rental property industry, you can take matters into your own hands. Not only can you buy at a good time, you can choose to exit in the face of a market decline – if you know early enough.