Real Estate Rental - Why Investors Should Invest In Real Estate Rentals
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Uploaded on Jul 21, 2011
http://www.REIClub.com - Why Is a Real Estate Rental A Good Investment In A Down Market? Here's Why Real Estate Rentals Are A Good Option For Real Estate Investors...
Current Real Estate Rental Market:
Sources from Fannie Mae and Freddie Mac expect the total number of renters households to increase by another 4.4 million in the next few years, from the already 37million.
With the current Unemployment rate being at an all time high, more families are turning to renting than buying because of a) affordability b) flexibility. Buying a home has more liability especially for someone who is unemployed, so renting is safer.
Right now, the rental property market is one of the only areas of real estate investing that has increased in the past year. It is expected to grow even more until property values decide to stabilize.
One of the main reasons to rent properties is to collect on the appreciation, AND you also get pretty good cash-flow.
Why Not Sell in a Down Market
- Right now is NOT the best time to sell - Buyers market
- Miss out on appreciation
- Unless you bought the house during a down market - you're selling for a loss
Pros to Rental Properties
- Passive Monthly Income
- Commercial Rentals have Exponential Growth
- Appearance - does not have to be as nice as "for sale" property
- Good Tenant - maintains home and pays rent on time
- Security - more options if market changes than stock or bank institutions
- Tax Perks
- Depreciation - annual tax deduction for the loss in value of your real estate
- Tax break may offset Income tax from rent
- Appreciation - increases in value more frequently than it loses value
- Existing mortgage - rent covers principle
Cons to Rent Property - drastically reduced by good screening
- Late rents
- Vacancy periods
- Damages to property
- Issues with Tenants
- Maintenance / Insurance
- Owned real estate rental property 5+ Years - Contemplating selling - most likely lose money on a sale - renting is best right now, and you can claim your losses as a tax deductible.
If you're not in a rush for immediate capital, one of the best options for your money is to invest in rent / lease properties. It allows you the flexibility to wait for the market to appreciate, all while building equity and maintaining a steady cash flow. Many homeowners become "secret investors" because they never sell their previous home, they rent it. For the ones that move more than others...well you get the point. So leasing properties definitely has its long term advantages compared to selling.
Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you'll be automatically notified when we upload more quick video tips for you. Take care and good investing.
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