If you whisper the words “passive income” in a room full of investors, you’ll feel the collective energy change immediately, and for good reason. One of the biggest benefits of investing in the real estate industry is the potential to earn a second stream of income that takes little to no effort to maintain. Renting out the properties in your portfolio can serve as a form of long-term passive income while you prepare your other assets for sale or rehabilitation. Here are a few more reasons rental properties may be a good investment for you.
The real estate market has seen its share of ups and downs in the last decade but investors can always count on the demand for residential property to remain high. Why? Because regardless of the state of the market, everyone needs a place to live. Over 330 million people live in the United States and many are searching for a more affordable alternative to homeownership. A 2019 study conducted by Freddie Mac found that 82% of renters believe renting is more affordable than owning a home. That’s a whopping 67% increase from the same study in 2018. With student loan debt hanging over the heads of many home seekers, renting is an appealing option to help them obtain housing without breaking the bank.
Spend Less, Earn More
New and experienced investors can take advantage of the overflowing demand for rentals and save money too. Auction properties are often available at a discount and come in a variety of home types, from foreclosures to bank-owned homes. Hubzu’s online auction platform gives you the ability to browse and bid on thousands of properties to find the investments that suit your needs. With the savings from purchasing a property at auction, you can invest the extra cash in renovations or tuck it away for a rainy day. Tax season offers another way to save when renting out your properties. Rental property owners may be able to write off a number of expenses including property maintenance costs, insurance and interest on your mortgage.
Like any home purchase, buying an occupied property does come with some risk. You may not be allowed to inspect the inside of the home and there could be a few additional steps needed to acquire the property. But when your goal is to make the home a rental, some occupied properties have a prospective tenant at the ready — the current occupant. This arrangement isn’t guaranteed but offering the current occupant the first right of refusal on the lease can save you the time, money and resources you’d spend shopping the home around the market.
With all of the benefits that come along with becoming a rental property owner, it’s clear that renting has the potential to boost your investment portfolio. If you want to learn more about the benefits of investing in real estate, visit our support page on Hubzu.