subject: 7 Key Benefits To Owning Rental Properties As Investments You Need To Know! [print this page] 7 Key Benefits To Owning Rental Properties As Investments You Need To Know!
Number #1 Benefit of owning your own rental property is that it's a tangible asset. Unlike other existing investments like stocks or bonds you have a real asset that is rented by others who pay you month in and month out. Regardless of what the economy is doing the bottom line is that we all need a roof over our heads.
Benefit #2 rental properties as a business is far easier to understand and can easily be measured and compared over time. It is a business which is easily definable since it involves all five senses something that is real. You the investor can easily see future cash flow potential and profit projections over time with rent increases given chosen ownership strategy. The revenue comes directly to you the investor so there is much more control in this type of investment.
Benefit #3 you can really grow your wealth faster through the leveraging of your money in real estate than you can using traditional means. Traditional means are investments through financial institutions such as banks, brokerage houses for securities, stocks and other paper investments. These investments offer no leverage to buy stock $25,000 gets you $25,000 of stocks with most likely a very low return. This being said a real estate investment of $25,000 gets you a property worth $250,000! Over time you get appreciation on the $250,000 investment as well as positive cash flow from the rental of your investment.
Benefit #4 business today is unpredictable and the stock market for the past 5 years not for the faint of heart. In today's world economy no one knows when the Dow is going to drop another 100 or 200 points which means today you have an investment and tomorrow it is evaporated. Real estate however has stood the test of time, year after year the building is still there perhaps one family moves out and another one takes its place. What this means to you the investor is the stability of your investment. Regardless of what the financial markets are doing. As times of financial downturns show up and credit tightens up this makes the rental market all the more stable.
During economic downturns some people do loose their homes and when this occurs they need to shift to more affordable housing which means rental properties. As you can see this is the kind of leverage real estate investment offers, rental income comes in month after month. No matter what the economy is doing you'll have future returns on your money constant cash flow.
Benefit #5 you're assured of fixed cash flow monthly which pays for your mortgage and building maintenance all this is paid by your tenants. Building maintenance is normally very predictable and is budgeted over the course of time through the incoming revenues. So there is no major loss of revenue to be had from. What this gives you is peace of mind.
Benefit #6 is the most delicious of all is the appreciation of value over time. If we take for example the market in Montreal over the last 50 plus years the average appreciation has been 5%. Appreciation occurs for many different reasons and is why location, location, location is so important to assure that extra bonus of appreciation. This is the extra money you make when selling the property and pocketing the difference that you paid to current market value. So you need to be diligent when investing and knowing that the community will be strong down the road and well into the future.
Benefit #7 is the fact that your costs are higher in your initial purchase for the first couple of years. Welcomes taxes etc are paid in the beginning but once out of the way you cost to operate decrease thus your cash flow increases also and of course expenses are tax deductible.
FollowMarie France for more information about Zen Investing; how she does it, what does it take to get started and to find out about what she's buying. Marie-France is based in Montreal, Quebec Canada and has over 10 years of successful real estate investing experience.
