If you’re considering a jump into real estate investment, you may be wondering how it can benefit you. With that in mind, we’ve gathered some of the best reasons why investing in a rental property now is a great choice. When you do decide to get into the rental market, you need a partner that will help you maximize that investment; you need a property management company. Here in Little Rock, Real Property Management Central Arkansas will work for you to make the most out of your rental property. Without further ado, let’s take a look some of the reasons why you should invest in a rental property.
-Drop in Homeownership
In the years since 2004, the homeownership rate has dropped nine percent. This can be attributed to many different factors. Home values have continued to rise over that time period, whereas incomes are not seeing the same level of increase. That makes purchasing a much more difficult option for many people who end up sticking with rentals. On top of that, many younger Americans appreciate the flexibility allowed by renting. More and more young people are delaying life events that typically precede purchasing a home, like getting married or starting a family.
Though incomes have not increased at a consistent rate, that has not stopped the influx of a millennial workforce from needing a place to live. As such, most people are staying in the rental market through their 20s and mid-30s. Surprisingly, more baby boomers are also moving to the rental market, with an estimated 4.3 million becoming renters over the past 10 years. This all results in a rental market that is consistently growing. The fact is, renting is a more viable housing option than buying for many more Americans than in the past. With more and more households renting, that places landlords at an incredible advantage to see more potential in their investment come to fruition.
-Passive Income Source
One of the biggest benefits a rental property presents is its potential as a passive income source. Essentially, that is a source of recurring income that demands a comparatively small level of effort to maintain. Whether it’s a source of income on the side or a way to add financial security to a retirement plan, having a passive income source can be hugely beneficial. Income from rentals is typically taxed differently than employment income.
In order to ensure you get the most out of a passive income source, you need to work out all cash flows prior to investing in rental property. Factoring in all of your expenses will help you make this as profitable as possible. Assess your cash flow to see if you will be able to make a consistent income on any given property prior to investing.
Whether it’s a temporary relocation for work or an inherited family home, there are many reasons why someone could end up with an empty property. When a home is left vacant, it is more susceptible to vandalism and squatters. When someone isn’t inhabiting a home, maintenance problems go unnoticed and can escalate into much larger, very costly problems. Unless it’s right next door, it is very difficult to keep an eye on a home you aren’t living in. When you rent out the property, you have better peace of mind that the home is being maintained and treated well than if it sat empty.
-Flexibility for Selling
If you’re ready to move, but the market conditions aren’t looking that great, renting your property can give you the flexibility to sell at the right time for you. This helps you avoid selling your property at a loss, while giving you an influx of income from a renter. When you have the freedom to wait on selling until the market improves, you are in a better position to make an increased profit off your property.
-Option to Move Back
If you find yourself in a situation where you can no longer stay in your current residence, whether financially or otherwise, having the option to move back to your rental property can remove a lot of potential sources of stress. While this is a great option to have available to you, it’s imperative you look into your state and local housing laws regarding this type of situation. More than anything, you want to honor the terms of your lease with any current tenants to avoid legal ramifications.
-Property Value Appreciation
When you rent out your property now, it allows you to hold onto it in case its value appreciates. This gives you the option to sell at the right time, depending on how much it appreciates. The amount it may appreciate will depend largely on the market, location, and other factors in the surrounding area. For instance, a shopping center or a school can make a certain location more desirable, which will increase the value of the properties in the vicinity. Take a look at appreciation potential of different cities, neighborhoods, and compare with the location where your rental property is to see what level of appreciation you may be able to expect.
If you already have money invested in the stock market, diversification of your portfolio is often the biggest piece of advice financial experts dole out. When you diversify your portfolio with a rental property, you can add an extra layer of protection against risk. It can also put you in a better position to understand and take advantage of potential positive market swings. Whereas the stock market can often be volatile and unpredictable, a rental property is often a much more stable investment thanks to the consistent cash flow provided by rent from tenants. Many investors will never see a return from what they put into the stock market, so a rental property is an effective investment opportunity with a consistent payout.
There are many incredible benefits that come with owning a rental property. From adding in a passive income source, providing you a wider range of options for selling, to diversification of a portfolio and taking advantage of property value appreciation, there’s a lot you stand to gain from taking a chance on investing in a rental. When you are looking for a way to maximize your investment into your rental property, you need a good property management company on your side. For the Little Rock Area, there’s nobody better than Real Property Management Central Arkansas. We can assist you in determining the best level of rent for your property, conduct move-in assessments, and regular inspections to ensure your property stays in good shape. Call us today to learn more about what Real Property Management Central Arkansas can do for you.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.