Are you thinking of throwing your hat in the rental property investment ring?

What’s taken you so long? Although the stock market is still the preferred investment destination for many American investors, real estate isn’t too far behind. There are about 10 to 11 million individual landlords in the U.S.

If you’re still on the fence about investing in rental property, it’s probably because you don’t believe it’s worth it. Or perhaps you believe there are other better investments you can make.

Well, you have your reasons, but we are here to share the advantages of investing in rental real estate. Hopefully, by the time you’re done reading you’ll be ready to start investing.

Read on!

1. A Nation of Renters

America has long been a nation of homeowners. It’s still is, considering that over 60 percent of American adults own a home, but renting is increasingly becoming popular.

In 2017, for instance, more people in the U.S. were renting than at any point in the last 50 years.

There are a couple of reasons renting is becoming a trend. Over the past decade, property values have risen far more than incomes have risen. As such, an increasing number of people are unable to afford homes.

Secondly, millennials, who are now the largest generation, aren’t suckers for homeownership. Most prefer the flexibility that comes with renting a home.

As a prospective property investor, this should be music to your ears. A nation with an increasing number of renters means the demand for rental property will keep increasing.

If you’re worried about your property going vacant for several months, worry not. As long as it’s in a good location and it’s in a good condition, there’s a high chance it’ll always be occupied.

2. Earn Income without Lifting a Finger

Well, don’t take that statement too literally. Money isn’t going to start flowing into your account as soon as you invest in rental property.

What we mean is you have a good opportunity to earn passive income. This is income that doesn’t require you to work a lot to earn it.

At the heart of it, real estate is an ideal way to earn passive income. Once you’ve secured a rental property and rented it out, most of the time all you’ll need to do is collect money from the tenant.

Of course, there are responsibilities that come with owning rental property. For example, you need to respond to the tenant’s requests, especially if they involve repairing the property. A problematic tenant can also make owning rental real estate a major headache. Additionally, making your property look welcoming and unique helps a lot. To make it easier for you, check out these popular themes for your future short-term rental.

Largely, though, you’ll earn income without doing much work. And if you don’t want to work at all, you can outsource your property management duties to a company that offers property management services.

3. Ability to Sell the Property and Cash In

A rental property can be like a slice of bread that’s buttered on both sides.

On one side, you’re earning rental income every month. On the other side, your property is probably gaining value, gradually increase your equity.

Depending on how the real estate market moves, property prices can increase so substantially that selling the property makes sense. Here’s the best news: you can sell the property if you want to and cash in on the booming values.

Since property values can still come down after going up, cashing in at the right time is key. What’s more, you might not need to worry about your current tenant should you need to sell. If you’re selling to another investor who wants to maintain the asset as a rental property, you won’t need to ask the tenant to relocate or take other drastic measures that might expose you to legal liabilities.

4. Flexibility on Property Use

Your goal is to invest in a rental property and earn rental income.

However, due to a range of reasons, you might need to use the property in a different way. For example, if something happens to your current home, you can easily move into your rental, especially if it’s vacant. Even if it’s not vacant at the moment, the lease agreement gives you the right to give the tenant adequate notice to vacate the house.

Or, if you no longer want to use it as a traditional rental unit, you can convert it into a vacation rental. With services such as Airbnb becoming super popular, you could make even more money listing it on Airbnb.

Just keep in mind vacation rentals have different demands. For example, you’ll be in charge of cleaning the unit once a guest leaves. For this, you can get the best Airbnb cleaning service in your area.

5. Portfolio Diversification

If you’re already an active investor, investing in rental real estate is a low-risk way to diversify your portfolio. Don’t just put all your eggs in the stock market. What if it crashes?

With a real estate investment, you’ll rest easier, knowing some of your money is in a market that’s not volatile. There’s no chance you’ll lose your investment overnight.

6. The Tax Benefits of Being a Landlord

When you invest in rental property, you become a landlord. And as a landlord, you’re entitled to a range of tax deductions.

For example, if you buy a property with a mortgage, you’ll be able to make mortgage interest deductions from your income taxes. Other deductions include:

• Depreciation deduction
• Travel costs
• Legal expenses
• Maintenance and repair costs.

Owning a Rental Property Is So Advantageous

There are few investments that beat rental property in terms of risk and ROI. If you were debating whether or not to invest, it’s time to close the debate and start hunting for your first property. As we’ve demonstrated, there are big advantages.

Stay on and read more about real estate on our blog!