There are two types of investments. First, you have investments that are worth it or worthy. They’re investments that actually create returns, such as rental income in real estate investments. Then there are worthless investments – you know, the kind of investments that are too over-hyped, yet actually don’t create returns.
If you’re wondering if real estate is an investment that’s worth it, fortunately, it is. In this article, we will share a few reasons why investing in real estate is a great idea.
5 Reasons Why Real Estate is a Worthy Investment
“You’re only saying that ‘cause you’re a property management company.”
While it’s true that we are a full-service property management firm, it’s worth mentioning that we started out as investors. Our founders entered the industry as house-flippers, and once they saw how rewarding it was, they decided to share their expertise with others. So, don’t worry – we guarantee that we’d never suggest investing in something that isn’t worth your time. That’s why we have investment advisers.
However, that’s not to say that all real estate investments result in returns. The key to making money in real estate is knowing the market. From there, you’ll be able to find responsible tenants, know when to sell and not to sell, and the like. If you don’t do the research, you’ll end up with a property that won’t create the returns you wanted.
So ask yourself – are you ready for the work? You can’t consider the rewards if you aren’t ready to first put in the effort. If your answer is yes, here are several rewards that come with real estate investments:
#1 Steady Income Stream
Let’s start with the most popular reason why people purchase rental properties. It’s undeniable that real estate investment can be a lucrative business. You purchase a property, rent it out, and collect the rent – it’s that easy when you put it that way. However, even when you consider the costs associated with real estate, it’s still a great way to earn on the side. Property management can seem intimidating, but once you get the hang of things, all you’ll see is the cash coming it.
When you invest in real estate, you don’t have to attend to it 24/7. You’ll have to attend to repairs, maintenance, and more, however, most of the time, you’ll be able to earn a consistent income without lifting a finger.
Most of the work is at the start when you’re still looking for tenants and ironing out the rental agreement, and at the end when you have to deal with tenant turnover. Plus, if you partner with a property management company, all you have to do is wait for your return on investment (ROI). You can put it on autopilot.
#2 More Secure Than Selling
Let’s say you own an empty property that you do not want to sell due to sentimental reasons. Instead of leaving it empty, why don’t you convert it into a rental property? It can be a challenge to take care of a house that you can’t keep an eye on, but if you rent it out to responsible tenants, they can maintain it for you. Now that it’s occupied, it won’t attract burglars and illegal tenants.
Besides, selling a house isn’t always the wisest idea. Seasonality affects the profitability of your property, so it’s often better to rent it out until you’re in the position to sell your property at a profitable price.
And what if you want to move back? If you’ve sold it, where will you live? Renting it out makes more sense as you can move back whenever you want – of course, you’ll need to check the local laws so you don’t displace your tenants.
#3 Potential to Appreciate
One of the reasons why investors love real estate is that it appreciates. They’re anticipating that, in time, their investment property’s value will increase and they’ll be able to profit off of it. While they wait for that day to come, they keep their properties close and rent them out to make money on the side.
Keep in mind that you need to conduct a real estate market analysis to know whether or not a particular property is worth it. That way, you’ll be able to evaluate a given property’s potential to appreciate.
#4 Diversified Portfolio
We don’t know who said “don’t put all your eggs in one basket”, but they were spot-on. If you’ve already invested in, say, the stock market, you should invest in other investments like residential real estate. Every market is risky, so you should be able to protect yourself in the event of fluctuations in these markets.
You don’t even need a fortune to invest in real estate. There are a variety of ways to fund your investment property like taking out a bank loan. In addition, you can take advantage of tax deductions to write your expenses off, such as property management fees, homeowner’s association fees, and utilities.
#5 Forced Appreciation
Finally, you can force your property to appreciate. Unlike other investments that are volatile and are dependent on the market, you can ‘kickstart’ your property’s appreciation. Of course, it’ll still appreciate naturally but you can increase its value by improving the home.
Not all renovations increase the property’s value, so consult a real estate agent to find out which renovations are worth investing in. For instance, kitchen renovations can add up to ten percent to your property’s value, while a bathroom remodel can add five percent.
Why Partner with Luxury Property Care?
Real estate can be a worthwhile investment if you understand what it involves. Before you can feel its profitability, you need to learn how to properly maintain your property. If you’re new to the real estate market, make sure to work with a property management company to help you navigate your investment.
As your full-service property management company, we’ll be your “training wheels” to get you started on real estate investing. Let the experts at Luxury Property Care show you how it’s done. Contact us today by calling (561) 944 – 2992 or completing our contact form.