What Do People Need In Life?

Despite the efforts of modern marketing, there are very few things on this Earth that are a real need. 

Most people agree that the top two are food and shelter. Some people know that owning your own home is a great idea. Instead of paying rent, you are paying off a substantial asset that can help for retirement assets or the benefit of family members.

But is that the only way to gain wealth from real estate? A lot of people are familiar with real estate investing.  One form is investing on housing. Many buy properties to rent out to other people – commonly known as Rentals or Land lording.

The perception of this practice has many connotations – good and bad. Just as there are good and bad tenants, there are also good and bad landlords. Mostly that depends on the people involved – as in any business. The key is to understand these benefits and disadvantages and to have a plan to invest wisely.

Here are five reasons why investing in rental properties could be a beneficial addition to your portfolio.

1. Cash Flow

Cash flow refers to the amount of money that is left over when the bills (mortgage, insurance, taxes utilities and maintenance) are paid. The cash flow can

provide ongoing, monthly income that is mostly passive, allowing you to spend your time on other activities, such as career, family traveling or purchasing more real estate.

Cash flow from real estate is stable and far more predictable than most other investments. People always need a place to live.

That's great for anyone enduring the fluctuations in other investments, or career changes. The cash flow can be a buffer for you though the bad times and the key to living well during the good times.

2. Tax Benefits

In terms of investment earnings, rental properties are one of the best ways to get tax benefits. There are rewards to being rental property owners. The government offers tax benefits including: depreciation and significantly lower tax-rates for long-term profits.

3. Leverage

Paying your own loan on your house instead of rent is a great way to invest in the future. Having a tenant pay down that loan is a fantastic way to increase your net worth each month!

4. Appreciation

While the loan is being paid down every year, the value of real estate generally, goes up. Sure… you say: “We just had one of the biggest crashes in history. So many people lost their houses in foreclosure!” But did you know that most landlords just kept renting and making money? Those unfortunate souls who couldn’t keep their homes still need a place to live! Apartment vacancies are at historic lows right now.

Over time, values tend to climb higher and higher in most parts of the country. Since the goal is to have the houses paid off – and not sell them – the actual perceived value of real estate has very little impact on rentals, but watching the value grow is a definite plus!

5. Inflation

There is an old saying that nothing is certain except for death and taxes. A more modern version of this old saw might include inflation. But even if property costs stay the same or go lower, the rental prices are fairly constant, or are more than likely rising.

Inflation is the process by which prices increase due to the value of money decreasing. Consumer goods and services become more costly over time. While most people fear inflation, rental property owners benefit from higher rents – especially if they have fixed-rate mortgage payments!

As inflation pushes the cost of living higher and higher, cash flow will only increase.

As with any investment, there are risks involved – mostly with the availability of quality tenants. A smart property owner is well informed and has a plan to keep cash flow positive in any market conditions.

The best way to ensure a comfortable retirement is to leverage funds now. Smart investments now can yield substantial returns.

These steps are good places to start a more conscious and directed route to achieving your financial freedom. Read, reflect and take what will work for you.

Bottom line is that there is no blanket strategy. Each person must evaluate their own circumstances, needs and desires. Get the help you need to achieve financial freedom.


Above all, believe in yourself and believe that you will achieve your goal!

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Sources:

Lynda at Sonoran Sun | Private Equity Investments