subject: You Need to Know: 7 Key Benefits to Owning Investment Rental Properties [print this page] You Need to Know: 7 Key Benefits to Owning Investment Rental Properties
BENEFIT #1: Tangibility. Unlike other investments, like stocks or bonds, you have a real, physical asset that generates income day in and day out. Regardless of what the economy is doing, the bottom line is that we all need a roof over our heads.
BENEFIT #2: Simplicity. Making money via a rental property portfolio is far easier to understand than other business ventures, and can be easily measured and evaluated over time. As the investor, you can calculate future cash flow potential and profit projections with rent increases given your chosen ownership strategy. And you have the control, as the revenue comes directly to you.
BENEFIT #3: Leveraging. Property investment allows you to grow your wealth faster by leveraging your money. Traditional means, such as investing through banks, brokerage houses for securities, stocks and other paper investments offer no leveraging to buy stock. Simply put, $25,000 gets you $25,000 of stocks and most likely a very low return. The scenario with real estate investment, on the other hand, gets you a property worth $250,000 for that same $25,000 investment! What's more, over time you also benefit from appreciation on the $250,000 investment, as well as positive cash flow from the rental revenue.
BENEFIT #4: Stability. The unpredictable stock market situation over the last 5 years is not for the faint of heart. In today's world economy, no one knows when the Dow is going to drop 200 points, leaving investors helpless as their stocks evaporate in front of them. Wise real estate investing, however, has stood the test of time. Year after year, your property will remain standing, with renters and families moving in and out. Regardless of what the financial markets are doing, financial downturns happen and credit tightens. This makes the rental market even more stable. It's unfortunate, but during economic downturns people do lose their homes. When this occurs, they often need to shift to more affordable housing in the form of rental properties. The bottom line is, no matter what the economy is doing, you can bank on future returns and constant cash flow.
BENEFIT #5: Peace of mind. Investing in rental properties means that you're assured a fixed monthly rental revenue which pays for your mortgage and building maintenance. If you do your due diligence to select a good management company, building maintenance is very predictable and is usually budgeted over the course of time through the incoming revenues, so you won't encounter any major loss of revenue. This is hands-off investing at it's best.
BENEFIT #6: Appreciation. Now this is the icing on the cake. If we take, for example, the Montreal real estate market over the last 50+ years, you'll find that the average appreciation has been 5%. Not bad, eh? But you must do your due diligence: appreciation of value over time occurs for many different reasons and is why location, location, location is so important to assure that extra bonus. When all is said and done, this appreciation value is the extra money you will make when selling the property: pocketing the difference between the price you paid and that of the current market value. So be diligent: before you buy, know that the community will be strong down the road and well into the future.
BENEFIT #7: The longer you're in, the better it gets. After the first couple of years, your operational costs will decrease once the welcome tax, etc., are out of the way. Now your cash flow will increase significantly and your expenses become tax deductible.
Want to know more? Contact Marie-France Dayan marie@thezeninvestor.com for more information about Zen Investing: how she does it, what she's buying, and what it takes to get started.
