If you’ve been looking to get into the real estate game, now is the time. With market rates at an all-time high and mortgage interest rates still near historic lows, this may be your last chance to buy a house before they shoot up. At least that’s what some experts are predicting. Furthermore, with tax season ending on December 31st, there’s no better time than right now to purchase a rental property.
Of course, the idea that you can get a good rate of return on rental properties has been around for a while. Unfortunately, most would-be investors are scared away by three things. First, they believe that there is a lack of free money in real estate to make investing in rental properties a profitable endeavour. Second, they’re afraid to buy property at the wrong time because of what’s been happening in real estate lately. And, third, they’re reluctant to risk their money on a property they don’t fully understand. The truth, however, is that all three of these concerns are overblown.
First, the idea that there isn’t enough money out there to invest in rental property is wrong. In fact, real estate investors are making more money now than they have ever done before. But most people don’t really know how much income you can make on rental property and how you can go about doing so. Click here to know more about Rental Properties.
The 4 Benefits to Rental Property
1) Low Risk
If you’re going to invest in something, you want to minimise your risk. Buying rental property reduces the amount of risk that comes with other investments. For example, if you buy a stock or bond today, there is no guaranteed return on your money at all. You’re putting all your money into something with an uncertain payoff. With real estate, there are no such risks. You can put your money into a building (a rental property) and you will likely see a return on your investment. You can’t say that for other investments out there.
2) High Returns
The rate of return on rental property is higher than any other type of investment out there. You see, when you buy a stock or bond, you are essentially loaning money to someone else and hoping to get that loan back with interest. That’s why you have to pay for “insurance” on those types of investments. But with rental property, you are actually earning money from the building that you buy.
3) Tax Breaks
Because you are collecting rent and making a profit on property, there are a lot of tax incentives to investing in real estate. The government wants people to invest in real estate because it will help the economy grow by creating jobs and generating more capital for companies to use for growth. Real estate also acts as a buffer against inflation. As the economy grows, you can use the money you make from your rental property to buy other investments that will keep pace with inflation.
4) Level Playing Field
Today’s market is very competitive and has driven prices up to near the stock market highs of last year (16th). This is an excellent time to invest in rental properties because there are so many buyers out there competing for the same houses.
Since the real estate market is growing, you are more likely to see a return on your investment. Traditional investment strategies like stocks and bonds have been flat recently. With an investment in one house, you can expect steady gains in value. This is because of the second reason most people are afraid to buy a property – they are worried they will invest in the wrong time.
But this is an old strategy that goes back to the 1920’s with the housing bust of 2008. The truth is that you should always buy real estate if you can afford it. It’s not worth it, however, to go out and buy something just because you believe it’s going up in value, just like it isn’t smart to sell something for less than what you can get for it.
This is one of the big reasons people are afraid to buy a property. As the rates on mortgages rise, they will be paying more than they can get on their current income. That’s why you have to have enough money saved up in order to get a mortgage that you can afford. But most real estate investors don’t bother buying because they believe it’s too late to get any kind of mortgage.
Now is the time to buy real estate. There are tons of properties available right now that can be had at a bargain price. The market has been driven up by very high demand for housing and interest rates are low. Some investors don’t even qualify for conventional mortgages because their debt exceeds what banks will lend them money for. If you don’t have enough for a house but can afford to buy a rental property, now is the time to do it.