Do you want to purchase a rental property someday? It’s common for people to want to buy a home for themselves and their families, but purchasing investment properties is next-level stuff.
It’s not a bed of roses, however. Failing to proceed cautiously can turn the dream of buying a rental property into a nightmare — a costly one at that. So, should you buy a rental property? If you have the financial wherewithal and some money set aside for maintenance, repairs, and unexpected emergencies, it’s worth considering.
Here are five benefits of buying a rental property — and why hiring a property manager can be one of the best investments for your real estate strategy.
1. Passive Income
One of the main reasons people buy investment properties is to generate passive income. Buying real estate, finding tenants, and collecting rent every month will provide another revenue source. If you play your hand right, you can use the rental income to pay the monthly mortgage and have enough left to invest, save, or do whatever you want.
But here’s the thing. Passive income, while great, takes work. You won’t get passive income from bad tenants. Most investment property owners don’t know the first thing about finding good tenants. If you’re like the majority, you could have trouble getting passive income.
Hiring a property management firm can help you find quality tenants who will respect your property, treat other tenants and neighbors properly, and pay their rent on time every month. Otherwise, you can kiss your dream of passive income goodbye. So, a property manager is a worthwhile investment.
2. Property Appreciation
Another reason to invest in a rental property is you’ll benefit from property appreciation. While no investment is without risks, real estate has proven to be a reliable investment class. Buying a property in a desirable area, maintaining and repairing it, and holding onto it for the long haul will likely see the real estate grow exponentially in value. Whether you continue to hold it or sell it to monetize your investment, you’ll have options.
3. Move in if You Want
Yet another reason to buy an investment property is that you’ll have the option of moving back into the unit down the road if that makes sense. Whether you want to downsize, need somewhere to stay after losing your job, or experience some other issue, owning a rental property will provide options. As long as you don’t violate any occupancy agreements you have with tenants, you’ll have a place to stay should the need arise.
4. Diversify Investments
It’s essential to diversify your investments so you don’t have all your eggs in one basket. You might invest in stocks, index funds, mutual funds, bonds, cryptocurrency, and investment vehicles. Adding real estate, whether a home for your family or an investment property, is a good move. The goal is to ensure you make money regardless of the economy.
5. Hedge Against Inflation
Real estate is also a hedge against inflation. When the cost of living goes up, property valuations and rental rates go up, too. So, owning investment properties can serve as a natural hedge against inflation. Remember that people need to live somewhere regardless of the state of the economy. Real estate ownership can be a reasonably safe investment.
These are five reasons to consider buying a rental property. Property ownership isn’t for everyone. If you’re drowning in credit card debt, for instance, you may want to hold off. But if you have the ability, purchasing a rental property can be one of the best investments you can make.
