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5 reason to love rental properties (& why rentals make sense)

I have never had much luck with the stock market, although my stockbroker always makes me feel like my retirement plan is doing well. I have averaged 6% to 7% over the last 20 years and that has just recently gone up due to the latest record-breaking years on Wall Street.

My rental properties, however, have blown my mutual funds out of the water. And, when you consider the small amount of money I put down on many of my properties, my cash-on-cash returns have been off the charts.

The one thing I warn people about before investing in real estate is to make sure you look at the investment as a long-term hold. If you do not have the extra annual income to fade unpredictable months then make sure you put down enough money on the front end to create positive cash flow to offset future financial hiccups.

 

Why rental property is a great investment

LEVERAGE

You only invest a small amount of money (20% of the price) and the bank gives you a loan for the rest. Rental properties allow an investor to buy much larger assets than they could in other investments such as stocks. Then you let the renter pay them off for you.

CURRENT LOW RATES

Interest rates are a critical factor in your monthly cash flow, and remember your rate will typically not change over the life of the loan. When rates are lower, like they are right now, it really gives an investor the advantage in realizing a better return on their investment.

IT REWARDS HARD WORK

If an investor wants to leverage their time towards rehabbing the property they will get a reward. The same goes for managing their property or using their networking skills to find under-valued properties. This is very hard to do in many other investments.

INSIDER TRADING IS LEGAL

You can go to prison if you buy stock with intimate knowledge of a publicly traded company, but that is not the case with real estate. If you learn of a new corporate headquarters coming to your area and you purchase in that area for higher rent values and appreciation it’s totally legal.

IT IS STEADY

People always need a place to live and you can always rent a home, of course, supply and demand can dictate rental rates but you can always rent at some price. It depends on who you talk to but historical data has shown us that real estate appreciates, on average, 4.5% over the last 30 years. If you really want to see the power of investment property over time, go to www.calculator.net and plug in your numbers. It is a fantastic investment property calculator that shows you cap rate, cash on cash return, internal rate of return, and other useful charts to help you quantify an investment in real estate.

Search for Investment Properties at murfreesborohomesonline.com

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John Jones

During his 30 years in real estate, John has helped more than 7,500 families handle their real estate needs. Nobody has sold more homes in Rutherford County than John and there is not even a close second. Before opening his own brokerage, John Jones was a perennial top producer for Coldwell Banker from 1998 to 2008, consistently ranking among the top 1% of agents in the nation. In October of 2008, John realized his vision of a small boutique real estate firm that offers the best in customer service, market knowledge, wealth building opportunities, and innovative techniques that get homes sold. Offering several revolutionary programs to his clients such as the Guaranteed Sale Program, Instant Offer, and the Fixer-Upper program, John and his team continue to perennially set production records, with 560 units sold and over $185,000,000 in volume in 2020. Those numbers again put the company's agent average at the top of both the Rutherford County and greater Nashville rankings.

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