There are some advantages to investing in a rental property, but it has to be done correctly for you to make money.
Income from Renters
The biggest benefit of owning a rental property is that the renters will provide you with a direct income stream. Those monthly rent checks go straight into your business account, ideally more than offsetting any expenses for the month.
Income from Property Value Growth
In addition, since you own the property, you stand to gain from an increase in the property value over time due to changing demands in the area, even if the property doesn’t undergo any changes. This is obviously going to be a variable thing, as it depends heavily on the area where your rental property stands. In some areas, the value may rise significantly over the course of a few years, while in other areas it may remain flat.
Sweat Equity
The other factor that you should consider is that your sweat equity is likely to add additional value to the property as you maintain and upgrade it. Doing things like repainting the home, adding new siding, refinishing the inside, doing some basic landscaping to the yard, and so on will add value to the home without significant financial cost. Not only will this allow you to charge more for rent, but it will also increase the value of the property itself should you choose to sell it in the future.
Check out our article on What to Look For. If you don’t enjoy home improvement projects and don’t want to manage the tenants, rent and repairs, consider using a property manager. Tier One Real Estate can maintain your home, make sure you have quality tenants that pay rent, so you get your payment on time directly into your account and the repairs are taken care of quickly, efficiently and affordably.
If you have a question about this topic or need assistance with anything else, contact a TierOne Real Estate Property Manager at 801-486-6200 - we're here to help.
