Single Family Rental Property
For investors, the time to consider single family rental property options is today. This is because of the combination of low interest rates with high demand for rentals makes single family properties for rental purposes a very attractive idea. While many investors may balk from the horror stories associated with bad tenants or fear that the annual cost of maintenance may be too much, the truth is that the money to be gained far exceeds costs in most circumstances.
There are five good reasons why you should consider purchasing and putting up a single family rental property for rent instead of flipping it.
Ownership Costs:
Depending on how your property is financed, you could be looking at saving a considerable amount on costs. For rehabilitation projects, you may have to raise large amounts of money to make the repairs, put the home on the market, and hope someone makes the purchase at the price you want.
However, having a rental unit you fully own can save you on borrowing since you can put a lien on that property. You may save 25% or more depending on the conditions of the loan thanks to the leverage provided by owning a rental property.
Appreciation:
Getting a monthly payment for renting out your property is nice, but you can also add the appreciation that will grow over the years. You may make considerably more when selling a property five, ten, or twenty years after making a purchase which is why renting it can add to that income. This means that you can sit on a potentially valuable property and earn cash every month by renting it out until the time is right for a sale.
Getting Out:
Because single family homes are the most common type of residential properties, you can get out by selling your home to another investor or another family. Compare this to larger residential properties such as two or three family homes which only attract investors. Single family homes that are for sale bring in a far-wider range of buyers which means that when it’s time for you to get out, you have real options.
Taxation:
There are many tax benefits that landlords enjoy which you can take advantage and benefit your investment efforts. This means for properties you are renting, there are tax breaks for any updates, repairs, and even mileage you use in traveling back and forth. Depending on your activities, you may enjoy substantial tax breaks thanks to being a landlord.
Cash Flow:
Arguably the most powerful advantage is the amount of cash that you will generate month to month by renting out properties. While flipping a property means you get a substantial lump sum, over time you should exceed that amount through renting. Because the money generated comes in regularly, you are building up assets while getting more peace of mind during times when flipping properties becomes more difficult.
In the end, renting out a single family property offers considerable advantages and should be pursued thanks to the long-term profit potential.