8 Reasons Why Rental Properties Are the Best Investment

Why Rental Properties Are the Best Investment

1. You can purchase it using leverage.

Rental properties are great because you can borrow the bank’s or someone else’s money to increase the potential return.

This is known as leverage.

In other words, you don’t need to have 100 percent of a property’s purchase price on hand to be able to buy it. Rental properties allow me to buy large properties for far less cash than I might need to purchase stocks or other investments.

2. It allows the ability to hustle for greater returns.

Not only can I leverage my cash, but I can also leverage my time and abilities to make magic happen in this game something difficult to do with other investments.

In other words, I can hustle.

If I want to do the work needed to rehab a property, I can do that. If I want to leverage my networking skills to raise money, I can do that instead. If I want to leverage my knowledge and time to find better deals that provide an even greater return, I can do that.

Rental property investing gives me the ability to hustle for my future. If you need more information visit your nearest property management company.

3. People always need a place to live in.

The real estate market will go up and down, but the beauty of rental properties is that demand will never end. People always need a place to live, so unlike the latest tech trend or in your brother’s start-up, real estate is an investment that will last.

Furthermore, because increasing student loans are making qualifying for a mortgage more difficult and our culture increasingly values mobility, the demand for rental properties will only grow over time.

4. I can buy below market value.

I was raised by a “garage sale ” who taught me the value of haggling for the best deal.

As a result, one of my favorite reasons for investing in rental properties is my ability to find properties that I can buy below market value.

In other words, I can shop for a great deal!

Finding properties that are worth $100,000 that I can buy for $80,000 truly excites me and is an integral part of how I’ve been able to build wealth so quickly over the past eight years.

5. Insider trading is legal.

In the Wall Street world, there is a concept known as “insider trading,” which is when an investor makes a profit on a stock because he or she had access to some secret bit of information that helped him or her buy or sell at the right time.

This practice is not just discouraged in the stock market, it is also illegal and can even land you in jail (just ask Martha Stewart).

However, as a rental property investor, I can leverage any secret knowledge I can find to benefit my investments. If I know that a new light rail is moving into a neighborhood, I can jump in and swoop up properties before word gets out.

If I hear that a major industry is leaving an area, I can get out of that area before the market declines. And unlike in the stock market, this is 100 percent legal and encouraged in the rental property realm.

6. There are multiple ways to profit.

One of the greatest benefits of rental property investing, especially compared with other real estate niches and strategies, is the opportunity to capitalize on all four of real estate’s major profit sources:

Cash flow
Appreciation
The loan pay down
The tax benefits

7. You don’t have to be present to make money.

Finally, I love the idea that I can make money without physically needing to be present. That’s called a “job,” and I want to avoid that.

Understand that real estate is not generally a 100 percent passive activity, but over time, the systems you create can help you outsource most of the landlord process.

The dollars will roll in whether you get out of bed in the morning or not.

8. It’s (fairly) stable and predictable.

Yes, events such as the market collapse in 2007 do happen, but rental property owners who were investing for long-term gains did not suffer like those who were trying to be “fancy” (or as my good friend and fellow landlord Jordan says, “punk drunk on greed”).

Furthermore, I would argue that the 2007 real estate crash was predictable for those who were paying attention—because one of the defining characteristics of the real estate market is the boom-and-bust cycle that never goes away. Once an investor learns to identify this cycle, the old adage of “buy low, sell high” becomes much easier to achieve.