Investing and Investment Tips

Why Investors Invest In Rental Real Estate

Posted by on Apr 22, 2016 in Blog | 0 comments

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Investors can invest in a number of ventures such as pre-existing businesses, Forex trading or even real estate. The most common type of investment, as we’re starting to find out, is real estate ranging from turnkey condo complexes to smaller, single-family homes. As the economy and the real estate market changes, one thing that investors can be assured of is that property prices will still retain their values (if chosen wisely) and will provide a good return on the investment– whether now or years later depends on the area.

 

Of course, as with any other type of an investment, there’s the possibility of failure, especially if the investor didn’t do their homework. Not all properties are going to retain their values and if the home isn’t in a desirable neighborhood, renting or selling can be a seemingly impossible task. But, if you persevere and make wise choices, here are a few reasons real estate investment could be right for you:

 

  1. Ongoing Cash FlowOf course, the most common reason that investors invest in real estate is because it provides an ongoing cash flow for years to come. Since you’ll have solid passive income that you can easily depend on, you can focus on building a career, traveling or opening your own business.The reason many people choose real estate is because it’s fairly easy to get started and pretty much everyone can make the decision to invest, depending on their budgets, of course. If you ever hit a rough patch in your life and you don’t have enough money to pay your bills, real estate investing can tide you through.

 

  1. Your Property Will Appreciate In ValueMost investors choose to purchase a property and rent it out for a few years until the mortgage is paid off. The fortunate thing about owning an investment property for years is that the price will appreciate in value. Sure, the economy may take a turn for the worse, property values may decline in a neighborhood or a number of unforeseen circumstances may happen, but if you hang onto the property, it will eventually appreciate in value.With that being said, it’s important to know where you’re pouring your money. If you’re hoping a downtrodden neighborhood will ever turn around for the better, think again. You need to find a family-friendly area where you know people will find it desirable to live years from now.

 

  1. Protection Against InflationThe price of things we purchase regularly such as gas and groceries will continue to rise over the years. The problem is, that meanwhile, prices of items we need will increase, the value of money earned through work will decrease. One way that you can combat the crippling effects of inflation is by choosing to play it smart and invest in real estate.Your fixed-rate mortgage won’t increase on the property, but the value of your property will. Since inflation will ultimately increase the costs of living, that means you’ll have more money flowing into your pockets.

 

  1. You’re Not Responsible For Mortgage PaymentsWhen you take out a fixed-rate mortgage loan for your property, you’re not the one saddled with the responsibility of having to pay it back. Each month, the tenant you rent the property to is responsible for making payments on time, therefore, you’re one step closer every year to paying off your mortgage.30 years from now or whenever your mortgage is completely paid off, you will have a piece of real estate that is completely debt-free. Of course, it’s important to screen your tenants and check their credits because you need to make sure that when you rent your property, the tenant is actually going to be making prompt payments.

 

  1. You Control Your FinancesIf you’re employed by a corporation or an important law firm, you have absolutely no control over the outcome of your future. Though most people don’t count on getting laid off, it can always happen to you, even if you’re not prepared for it. To avoid taking a massive hit should your career take a turn for the worse, you should invest in real estate.Many investors like the fact that real estate investing allow them to control their futures. For example, if competition increases in the rental market, you can still control the outcomes by increasing your advertising efforts. Should the value of the property become affected, you still have the opportunity to make the necessary repairs and renovations to increase its value. At the end of the day, it’s the number one way to know what the future holds.

 

Most people are terrible at saving money and even worse at making wise investment decisions. Fortunately, real estate investing is the one place where everyone can do minimal research and still come out on top. Your real estate investment can be the perfect gateway to a peaceful retirement.

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