Why You Should Think about Investing in Rental Properties
For the disciplined long-term value real estate investor, rental properties can be a sound strategy for expanding both your real estate property portfolio and your overall net worth.
If you are not currently using rental properties in your portfolio, here are some reasons why you should be thinking about doing so:
Cash Flow Streams
When it comes to real-estate wealth building “cash flow” serves as the cornerstone to success. Having a system that creates enough cash flow from your rental properties (no matter if a single home or a multi-unit building) to cover your monthly obligations like mortgage payment, carrying costs, and other monthly expenses makes for a solid investment. The real opportunity in dealing with rental properties comes when you are able to generate a positive cash flow, bringing in more money than you are sending out. By taking that extra cash and returning it to your mortgage payments you allow yourself to pay off the mortgage even faster, saving you thousands of dollars in the process. The faster you own your home outright, the faster you are able to pocket directly the money received from renting it out.
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Other’s Cash – Your Mortgage
Renting your property to tenants allows you to leverage their rent payments for your mortgage payoff. The longer you rent the property, the less you have to personally pay; if you can keep tenants in for the life of the mortgage and beyond you can potentially begin to generate a sizeable revenue stream for yourself.
Grow Your Investment
You can increase your property’s value by investing in upgrades. As with any renovation you should first take the time to figure out what upgrades make the most sense from a financial perspective, working to get the highest return on your investment as possible. Remember, upgrading your property can not only increase your investment in the long run but it can also allow you to charge a higher monthly rent.
Factor in Appreciation
When you combine the increased value of the property thanks to your upgrades and renovations alongside the property’s appreciation, you will be in a position to expand your net worth’s bottom line.
Tax Breaks
When you add a rental property to your portfolio you also open yourself up to a number of tax deductions as rental properties allow you to deduct items like rental expenses and mortgage interest.
If you are interested in learning more about how rental properties can fit into your real estate investing portfolio or what kind of properties would make for good investments, do not hesitate to contact us at Homes Re-Imagined and let us help point you in the right direction.