Should You Invest In Residential Rental Property?

July 4th, 2016 | by James B
Should You Invest In Residential Rental Property?
Finance
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Having a home listed under your name is great, but property-related responsibilities, mortgage rates, and costs of long-term real estate maintenance can be a real bugger. Americans are sobering to the negative side-effects that go hand in hand with the homeowner title, and the number of renters has seen a major rise over the past few years. The shift in real estate tenure trends ushered the era of growth in residential rental property ventures, as many investors realized that the increasing number of tenants opens the door to stable cash inflow and sustainable long-term profits from a single (though initially high) property investment. Nowadays, real estate deals that pay off most are those that involve residential property flipping, so if you are considering taking a dive into house flipping waters, here are a few reasons why the endeavor is definitely worthwhile.

The shift in real estate tenure trends ushered the era of growth in residential rental property ventures, as many investors realized that the increasing number of tenants opens the door to stable cash inflow and sustainable long-term profits from a single (though initially high) property investment. Nowadays, real estate deals that pay off most are those that involve residential property flipping, so if you are considering taking a dive into house flipping waters, here are a few reasons why the endeavor is definitely worthwhile.

1. Rent Fees Provide Stable Cash Inflow

The title of a landlord does entail a few risks, but the financial perks are generous enough to cover potential losses. For this reason, funds invested in flipping houses for rental are wisely spent: rent fees are rising across the U.S., and the monthly rental fee provides a secure source of long-term cash inflow for landlords who dare to take the plunge.

2. The Initial Investment is relatively Low

The costs involved in renovating distressed property are in most cases lower than the price of a newly built home. Yes, there are exceptions to this rule, but granted thorough property research and comprehensive pre-purchase inspection, you should be able to find real estate that fits your investment budget and does not suffer from major structural problems. This is why planning the property endeavor with due care is so important: as the future owner, you need to make sure that the real estate is truly worth flipping and is not a money pit in disguise.

3. The Demand is Likely to Remain High

High demand is another reason why flipping property for rental purposes is so lucrative. The homeownership rate in the U.S. has been dropping over the past decade (the figure plunged from 69% in 2004 to 63.7% in 2015), and the trend is likely to persist even with rising rental fees. Middle-class Americans have grown disinclined to buying property and settling down: with the shaky nature of the economy, people are more willing to pay rent than take out a mortgage and slap their name on real estate, thus risking foreclosure in case of termination of the employment contract or similar unanticipated financial setbacks.

4. Residential Real Estate Boosts your Credit Rating

In addition to boosting your finances over the long term, a residential rental property can increase your credit rating and open the door to higher bank loans in the future. Lenders and creditors look favorably on loan seekers who own property, and they will in most cases eagerly extend a credit line to individuals who already have real estate in their name. The reason? The borrower’s real estate is a guarantee of solvency and timely debt collection.

5. Flipping Property is easy even if you are a Real Estate Newbie

Last but not the least, house flipping is not as complicated as it may seem to a newbie in the real estate market. Yes, you do need to plan the project carefully and cover your financial bases in advance, but once you get through the first stage and find a place fit for renovating, the rest of the process is a smooth sail. Depending on your budget and DIY skills, you can either flip the house on your own or hire contractors to do the work for you. As for selecting tenants, you will be able to pick and choose as every renter in the area will be more eager to move into a freshly overhauled home than continue paying a small fortune for a place that has not been updated for years.

Investing in residential rental real estate is safer than most jobs out there, so do not let locked out of your piece of property lucre cake if you can afford to buy a place and rent it! After all, a quality property will always be in demand.