Why Invest in Rental Property
The real estate investing infomercials of the housing boom suggest that real estate could make you rich - the benefit of real estate being exponential returns of your investment. While I only have a few small real estate investments there are a couple benefits to real estate compared to typical alternative investments like stocks or bonds:
- Appreciation - Like stocks, real estate has the potential for exponential valuation growth during a bubble or other period that causing significant valuation increases.
- Rental properties are a business - you can gain valuable business experience from maintaining a rental property if you don't have it already
- Some Cash Flow Flexibility - while not a huge benefit, unlike stocks or bonds, being the owner of the rental property allows you to make decisions regarding managing cash flow to your benefit. Your household finances tight this year? Maybe you defer some expenses associated with your rental and maximize your cash flow during certain periods if needed or proactively invest in your rental when household finances wise your cash flush.
- Consistent Cash Flow - certainly there are risks to the positive cash flow on a rental, but those risks are under your control. If managed well you could produce very stable cash flow.
- Value Add - If your handy, real estate is one mechanism to turn your talents into a higher value investment with the goal to increase cash flow
- Inflation Protection - Unlike a bond, rents typically rise on par with inflation rates so you have an added benefit of inflation protection.
- Property Management - Translating time to $. Flexibility of turning your hours of time into cash by performing repairs and property management yourself.
Related in Rental Property:
2012 Passive Income: Rental Property (Feb 10, 2013) Its been several years since I did a thorough analysis of our rental property performance and investment return. Here is an analysis of our 3 rental properties for 2012 that should give a pretty reasonable view of how these investments...
Rental Property Investment Breakdown (Sep 27, 2011) Here is some overdue financial record keeping from our latest rental investment in August 2011. This breaks down all our out of pocket costs to purchase the property and get the 1st tenant in place. Out of Pocket Investment in...
Thoughts On Buying Another Property In This Environment (Aug 15, 2011) We recently put a contract on a property to serve as an expansion to our rental properties. We weren't looking to expand, but an opportunity popped up that was compelling enough for us to make an offer. As we have...