It’s 2022, going on 2023 and more than ever we are aware how volatile and fragile life can be. We are living in a post covid-19 world where we saw and experienced how fast your world can change. With a word like ‘lockdown’ being used daily, the meaning bring instant memories back of working from home, working less, or at its worst. Not working at all.
The past 3 years was a time where we learned how important it is to have a safety net of some sorts for when calamity strikes. Of the many ‘financial backup’ options out there, investing in property remains one of the best ways you can grow your financial.
We’ve compiled a list of the 5 Top Reasons why a rental Property can boost your finances.
1. Rental Property generates monthly income.
Instead of a once off profit like ‘flipping’ a house, which is buying a home, fixing it up and reselling it, a rental property generates a steady income, weekly or monthly, over a long a period of time.
And as discussed in the introduction section of this article, we’re all aware of the constant rising costs of living, thus having a rental property income will go a long way to reduce the impact of price increases.
While you still have a mortgage on the property, your tenants rental amount will either cover a part or everything of the monthly premium. And once the property has been paid off, you will have a pure profit, long-term, growing investment to last you a life-time.
2. Property Increases in value over time.
People will always be on the lookout for a roof over their heads. The demographic of tenants will always be here. It will never change. This is called ‘demand’ and anything that is in demand is valuable.
Think of Oil, Gold, Iron, Food, Fuel etc. These things will forever be in high demand and thus their value will increase over time. The same goes for property that remains in demand, it will increase in value whether you sell or rent out.
It’s wise to invest in something with such a good and solid track record of stability and growth. It’s also a great investment as you have a lot of control over it, which we will get to later in this article.
One of the biggest advantages property investments have over any other investment is leverage, you can buy property with a small deposit generally 20% to 40% depending on your situation and borrow to purchase a property.
In some cases, you can even use security in an existing property i.e., your home and borrow the full amount to purchase an investment property, there is no other investment that allows you to do this. The advantage of leverage over roughly a 10-year period makes property a approximately five times better investment than any other investment.
For example, if you wanted to purchase one million dollars’ worth of shares or gold you would need one million dollars to make that purchase, but to buy a million-dollar property you would only need a $200,000 deposit or possibly not even that.
Property roughly doubles in value every 10 years, and arguably shares or gold may do the same. But with shares or gold you would only double your investment, with the property that would have increased in value of the purchase price, but you would have only paid a 20% deposit to secure the investment, so your return is roughly five times your investment.
As well as the advantage of leverage, if you buy well the rent from your investment property will not only cover its costs but produce an income for you every month, with other investments you only see your return when you sell the investment for more than you paid.
4. You are in control.
Unlike investing in stocks or Forex, you control most of what happens with your property investment. You make the decisions and the growth of your investment relies mostly on your input and effort. The more you put in the more you will get out.
What would be good practice when owning a rental property? Keeping an eagles eye on the maintenance for starters; having unhappy tenants due to broken or malfunctioning features will lead to disgruntled tenants. Another aspect of your property you need to focus on is making sure your property doesn’t get damaged by the tenants by having frequent inspections. This will keep maintenance cost to a minimum during a rental period.
5. Make sure you use a property manager.
This is where we come in! All our services are aimed at 2 main aspects. Firstly to reduce the hassle for you as much as possible. Secondly, to help your property grow in value! Having a property manager will make everything for the property owner much easier.
The Property Managers at The Rent knows the industry inside and out, so we’ll help you make the best decisions when it comes to your property. From sourcing the best tenants that will look after your property and pay their rent, to the maintenance that keeps your property in top shape.
We help market your property on multiple platforms from our website to our social media feeds, making sure your property is never without tenants.
We also have over 30 years of experience to give you the best advice. We advise on property protection and insurance specialists which we have a long standing relationship with a trusted network of tradies.
We trust you have found this article of value to you as a rental property owner, or soon to be!
And if you are ready to hire a Property Manager CLICK HERE and complete the form.