The real estate market is a booming industry that is full of potential and offers lucrative profits to investors. Since the homeownership rates are really low these days as most of the Millenials are staying in rental units as they work during their 20s. This is why investing in rental properties is becoming a huge thing in the real estate market. If you are interested in becoming a landlord you can check out Sims Villa floor plan that is an incredible housing option that you can consider if you are looking for investment options. Coming back to the advantages that you get as you become a landlord. Here are the best reasons why rental properties are a good investment option.
- As soon as you get a tenant for your property you get a source of constant income. The passive source of income will help you in improving your overall income. Moreover, you will get this income with minimal efforts which makes it more lucrative. You even get a tax rebate on rental income as it is different from employment income.
- Using your property as the rental property will give you a sense of safety as the tenant is always there and you won’t even have to worry about the maintenance of your property as well.
- Renting your property also provide you with a sense of flexibility as if you are interested in selling your property and the market conditions are not right you can wait for the time being. Moreover, the rental income that you get will always increase no matter what the market conditions are.
- As mention in the previous point, the value of your property is going to improve over time no matter what the market conditions are. You will be able to increase your rent every year depending on the market conditions. This is what makes rental properties a really good investment option. Additionally, if you are investing your money as you upgrade or renovate your property that is going to affect the value of the property positively as well.
- Lastly, owning a rental property also diversifies your portfolio. Which in turn add another layer of security from the market risks and swings.
Besides all this, there are several disadvantages to owning a rental property. Here is the list of downsides of rental properties:
- Owning a rental property is a big investment which is why this concentration of assets can be seen as a big risk. The problem with this is that every part of your investment is located to a single source and if anything goes wrong you might have to face a serious loss.
- The risk of tenants is always there as well. There are cases where the tenant does not pay their rent on time or you could not find any tenant for your property. In both these cases, you will have to pay for all the expenses that occur increasing your overall cost.
- Being a landlord you are also responsible for paying the house tax along with the insurance premiums. Moreover, you have to be really careful as you choose an insurance policy as you do not want to overpay for that.
- Active involvement is also required from your side as you become a landlord. You need to communicate with your tenants actively and do all the maintenance and repair from your end.
In order to get the best results from your rental property, there are several things that you should consider:
- The location of your property is really important as it significantly affects your rent. If your property is at a prime location with all the basic amenities you will find tenants more easily as well.
- Another thing that will affect the price of your property is the transportation facilities that are there. If your property has easy access to public transportation facilities then you will find it really easy to get a tenant and a good rental income. The parking facility is another facility that every tenant expects so if you have parking facilities then you can increase your rent a little bit more as your tenant won’t be paying for parking anywhere else.
- Lastly, the basic amenities such as electricity, water supply, proximity to gyms, pools, and other things would affect the desirability of your property as well.
If you do not want to invest in rental properties there are several other investment options that you can consider in this industry.
Real estate investment trusts are an effective way for people that want to get into the real estate industry but can not afford to invest on their own. These REITs allow such individuals to invest in these trusts as they buy or build any property. This way they get returns for their smaller investments as well.
- Managed properties
This is an option for those that can not invest their time in the management of their rental properties. There are several service providers and companies that you can hire for the maintenance of your property. These professionals will take care of your properties as they manage the property and collect rent as well. In return for their services, you pay them a percentage from the rent.
- Residential Investment Firms
Another great option for those who can not afford rental properties. In these firms, a group of people invests in residential projects. With some initial legal process, you get a steady source of income. Moreover, there are property managers assigned for all the work so that all the members can invest their time in their own work.
In conclusion, rental properties are a great source of income for people that can invest some of their time with the whole process. However, there are several great options for people that can not afford rental properties or do not have time to manage their properties.