Why Rent: A Few Thoughts

If you’re currently considering real estate, you also have a very important choice to make. Once you’ve fixed up the property, should you sell it, or rent it out? The choice you make will greatly affect the revenue you bring in on the property. Of course, every situation is different from the next, and therefore, the best option for you is not necessarily what everybody else is doing. However, many people find that renting out their property is much better for them than simply selling it. Here are a few benefits of turning your investment property into a rental property.

Greater income

This is arguably the biggest advantage of offering a property for rent rather than selling it. Selling a house will bring in its value all at once. Of course, when you rent the property, you won’t get its value for a while, but it will come over time, and then some. Owning rental properties creates a great source of passive income. This means that once you own the property, you don’t have to do very much work at all to keep the money coming in, unless you want to. The beauty of passive income is that it adds up. Instead of one large lump sum, you get smaller amounts, in this case, every month, for an indefinite period of time. After a while, you’ll find that you’ve made even more than you could have sold the house for initially.

This is great, because, if you can afford it, you can put the profits from each rental property into the next. Instead of making just enough on each house to get by and purchase another property, you can build an empire of properties, funding each new property with profits from all of the others.

You can still sell it later

So you’ve been renting out a property for 20 years. You’ve already earned more in rent than the house is worth, but now you need a little extra money. Maybe you’re trying to fund a more lavish lifestyle, or maybe you need a down payment for a particularly large property. Either way, you’re in luck, because you can still sell the property. In fact, the longer you hold on to a property, the more it’s worth, due to appreciation, so even after you’ve brought in 20 years worth of rent, you’ll still be able to sell it for more than it was worth when you began renting it out.

Use it as collateral

Chances are, once you’ve seen what can happen when you own a rental property, you’ll want more. Another great thing about retaining a property for rental is that you still own it, which means you can back a loan for another property with any equity you have in the initial property.

So, to put these concepts together, once you own a rental property, you can use it to solve most of the problems when it comes to buying your next property. You can borrow money against it if you need to, and then use the income to pay off the loan, if the new property doesn’t bring in enough money. You can even sell another smaller property to pay for the down payment if necessary.

As stated earlier, everyone’s situation is different, and everyone is looking for something else. However, owning an investment rental property comes with a long list of benefits. Profits and resources that come from one rental property can even help you in acquiring the next property. If you’d like more information on buying rental properties, or need help with anything else, please don’t hesitate to contact us.

Center Street communications are not intended to provide business, legal, tax, investment or insurance advice.  No Center Street communication should be construed as a recommendation for any business or investment strategy by Center Street or any third party.  You are solely responsible for determining whether any investment, investment strategy, business strategy or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation.