Real estate has been a popular investment for a long time, and for good reason! In fact, there are over 24 million independent landlords in the US alone!
The good news is that you can join that crowd and start making money for just a small portion of the cost of the property, and there are many reasons why you should!
Let’s talk about why you should become a landlord today!
Why You Should Become A Landlord: It’s A Safe Investment
If there’s one reason why real estate is such a possible investment, it’s safety.
There’s no such thing as a perfectly safe investment, but buying rental properties has to be the closest thing. You have total control over policies and decisions, the value doesn’t depreciate too fast, and the investment typically lasts for life. The best part is that you can get into the game for the price of a downpayment!
When you invest in the stock market, it could feel like the safest investment in the world if you’re buying a stock like Apple or Amazon. However, there are crashes, scandals, market fluctuations, and things that are totally out of your control.
When you’re a landlord, however, you’ll be safe from those hazards and have all decisions within your control. Also, you’ll get paid monthly!
Generate Passive Income
Passive income is income you receive while you just sit back and relax, and it has to be one of the biggest benefits of being a landlord. Keep in mind, there are levels to this.
If you’re doing everything yourself, you will have to spend some time on the property. If your property is on the newer side and your tenants are all optimal, then you’ll be looking at a few hours of work a month. It’ll be more when people move out and you have to clean up, repaint, market the property, interview and vet the tenants, fill out the paperwork, make repairs, and everything else. However, in a typical month, you won’t be looking at too much work.
If your house is more than 25 years old, you might be looking at more work when it comes to repairs and maintenance. Either way, it depends on how big the lawn is, how big the driveway is in the winter, how many trees you have, and many more factors.
If you hire a property management company, regardless of how old the house is, then the income will be completely passive. The only time you’ll be lifting a finger is to collect your checks at the end of the month out of your mailbox or online. However, those aren’t the only ways they can help you!
Your return on investment (ROI) is all that matters when you put your money into an investment endeavor. This is especially true when you’re borrowing money for your investment. You’ll only need to put a small amount down upfront, usually 15% to 20%, and you’re good to go from there! This offers a huge return that’s, again, paid to you every month, unlike other investments.
You can raise your rent prices as necessary to adjust for inflation, which protects you from falling victim to slow wage increases. This is a great way to protect your wealth and make sure you rise with the tide.
As we said, it’s a safe investment because you have control over it. You get to write up the lease (hopefully with legal help), set all policies including pets, set prices, and more. Even if you hire a property manager, you are still the owner. There’s no other type of investment that allows gives you this much control for such a small entry fee.
Let’s just say it. Social security isn’t enough for retirement, and neither is your retirement fund if you live too long. In fact, 1 in 4 Americans has nothing saved for retirement!
What happens if medical technology keeps increasing and you got some good genes? Are you financially prepared to live to 130?
Well, if you have monthly income on top of your social security, then you’ll be set for life. If you outsource your management, that income will be entirely passive, too. Once that mortgage is paid off, that money just flows in.
Potential To Grow
Rental properties are like an invasive plant. Once you have one, it’s a lot easy to get more. If you buy a 3 unit building and the income from one pays for the mortgage, while the other pays for property taxes, property services, and repair costs, that last one is pure profit. While you can adjust these prices to make more money, this is a good enough example.
Let’s say that the last one is $1,000 a month. If you save that up along with some other money you might be able to tuck away, it will only be a few years before you can buy your second property. Then, your income is doubled, cutting the time to buy your third one in half. If you start early enough, a $40,000 down payment is enough to turn you into a real estate giant!
You Can Start Now
Now that you know why you should become a landlord, the best benefit is that if you have a downpayment ready, you can get started now! If you’re ready to get started, then keep up to date with our latest real estate news, get help with your property, and find out what to include in your rental agreement!