Purchasing a rental property isn’t for everyone, but there are some serious benefits to be gleaned from the right investment. Rent checks make for a fantastic supplemental income, and the business can be as hands on or off as you deem fit (and can financially afford). If becoming a landlord has ever crossed your mind, consider the following reasons investing in a rental property can be an excellent career move.
Plenty of Financing Options
You don’t necessarily need to be sitting on a mountain of cash in order to purchase a second property for rental purposes. While you’ll be hard pressed to get approved for a bank loan, there are plenty of financing options for entrepreneurs looking to get involved in the real estate industry. Some choose to approach hard money lenders, but there can be downsides to this convenient route. While you’ll get the money you need to purchase a fix up a home within a few weeks’ time, you’ll also be faced with paying high interest rates, so it’s best to know you’ll be able to pay back your loan with immediacy. Others choose to invest with a partner; you put in the work, while they put in the cash, then you split the profits 50/50. Still others look to angel investors to fund their dreams, though again, this can come with high interest rates. If you’re confident in your dream of landlord-ing and know you can turn a profit, these options can be great ways to get your foot in the door and purchase your first property.
A Competitive Rental Market
In today’s world, more and more Americans are choosing to rent instead of purchase. That makes for an extremely competitive rental market, especially in major cities and urban areas. With an increase in competition, landlords have found they’re able to charge much higher rent rates, especially if located in a city with a lack of real estate. Consider San Francisco; now touted as the most expensive American city to live in, many landlords can charge rates of $2,000 and upwards for tiny one-bedroom apartments. It’s never been easier to take your pick of the litter and charge a little bit extra per month, and with house prices being as low as they are with low interest rates, you’re almost guaranteed to make a great return on investment. Because you will have your pick of numerous applicants, always be sure you’re doing the utmost in screening—the last thing you want with your first rental property is to deal with the proverbial nightmare tenant. Companies like MySmartMove make it easy to check out an applicant’s credit score and criminal history, and can also tell you whether or not the applicant has ever been kicked out of their home before.
Hands Off or Hands On?
Are you looking to be a hands-on landlord who your tenants can call any time an issue arises? Perhaps you’ve always loved fixing things around your own place and want to put your handyman skills to work. In these situations, rental properties can be a fantastic career change. Those looking to get out of the office and get their hands dirty often find switching to full time landlord duties can be extremely rewarding. On the other side of the spectrum, perhaps you’d like to get involved in real estate but keep your hands out of the dirty work. Property management can make all the difference. For entrepreneurs that have some cash to spend but not the time to invest often use property managers to handle the daily nitty gritty of the business. While these services don’t exactly come cheap, the investment is often more than worth the decrease in stress and daily responsibility that a rental property can require. Whether you’re looking to make your rental property your full time career or you’d like a more passive commitment, you can find a way to make it work. Real estate investments are flexible and can be tailored to your individual needs and wants.
Investing in a rental property can be a fantastic move for an entrepreneur in any stage of life. Keep these facets in mind as you consider the benefits and disadvantages and decide whether becoming a landlord is right for you.