4 Benefits of Owning a Rental Property
Are you an entrepreneurial-minded business person with one or more side hustles to diversify income streams? If so, you’re not alone. Side hustles are a fact of life for many.
According to one survey of 2,500+ U.S. adults, 44% of people who have side hustles believe they’ll always need the extra dough that comes with working other jobs. And more and more people are starting to see the importance of having side hustles.
If you’re looking to increase your monthly cash flow and build a stronger financial foundation, one option is to invest in a rental property and find quality tenants who’ll pay rent every month.
One source notes that the average price for a home in the U.S. last year was $348,079. So, if you have the financial wherewithal to buy an investment property, that can be the ultimate side hustle. It’s not for everyone, of course, since it can become an albatross if you’re not careful. But consider these four benefits of owning a rental property to see if it’s the right move for you.
1. Passive Income Potential
One of the main benefits of owning a rental property is you can get passive income from your tenants monthly. So, if you have investment real estate, get dependable tenants, and take care of the grounds, you can get a reliable stream of income to invest, save, or spend as you desire. The thing with passive income is that it’s just that…passive. The process can run like clockwork.
Before taking the plunge and investing in a property, crunch the numbers to ensure it’s the right move for you. One reason rental property owners retain property management companies is that these service providers can help take care of tenants, maintain the grounds, and even collect the rent. You’re more likely to have tenants who behave well if they and their units are taken care of. A property manager will ensure that maintenance and repairs don’t fall between the cracks.
2. Property Value Growth
When you buy a rental property and hold onto it, you can experience property valuation growth that gives you a tangible return on investment. You can either continue to hold onto it, perhaps passing it down to your children at an appropriate time, or sell it to take your profits. That’s why it makes sense to select the right investment property in a good area. The growth prospects will be greater if you do your homework before buying real estate for investment purposes.
3. Option to Move Back
Buying a rental property can also give you a safety net should you need to move in at some point. If you run into financial difficulty or need to relocate to be closer to work, you’ll always have the option to move into your investment property. So, it can make money for you and then, should circumstances warrant, provide you with a place to reside at some point in the future. Of course, you’ll have to respect any lease agreements you have with tenants. You’ll need to work things out in a way that’s fair and legally permissible.
4. Diversify Your Investments
Another reason to buy a rental property is that doing so can diversify your investments. Investing in stocks, mutual funds, and index funds is a good idea. So, too, is investing in a home for yourself and an investment property that increases your cash flow.
Instead of putting all your eggs in one basket, you can safeguard against risk by diversifying your investments.
If you’re thinking about investing in a rental property, these are four reasons why doing so makes sense. Of course, everyone is different. Ensure you’re ready to make the investment before you go all in — otherwise you might be left with a case of buyer’s remorse.