Here’s How You Can Build Your Wealth By investing in Rental Properties
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Investors
Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.
— Robert Kiyosaki, Author, Rich Dad, Poor Dad
It is no secret that real estate is the most consistent wealth-building asset you can have. Irrespective of the downturns, recessions, wars, famines, and natural disasters, a real estate asset’s value is preserved over the long term. For instance, a yearlong recession can send your property’s value tumbling down. But the recession will end – sooner than later. When it does, the subsequently boom not only recovers all the lost value of your property but also appreciates it, as you ride the phase of economic growth.
Naturally, some of the world’s richest families have built their wealth over generations of investments in real estate. But, did you know that that real estate can be more than a long-term investment?
Real estate investments can be sources of reliable cash flows too. For instance, rental properties can grow your wealth, even as you earn rental money off of them. Here are some tips to grow your wealth by investing in rental properties.
1. Value Appreciation
This is your primary source of wealth. Naturally, much of the hard work goes into figuring out which properties can offer you the highest ROI in the future. So, hiring a capable and reliable real estate advisor is the key to rapid wealth-building.
2. Forced Appreciation
This is emerging as the choice of strategy for rapid wealth-building investors. Soon after they buy a property, they renovate it into an irresistible asset for other buyers.
For this to work, you must have a clear understanding of which improvements can appreciate the property and which don’t. You don’t want to invest your money into something that doesn’t offer much value, do you?
Once the renovated property is ready, you put it back on the market for a higher price and keep the profits. Rental properties in urban areas are always in demand. So, another investor will likely buy your renovated property soon.
As you can see, this strategy requires your time, effort, and a thorough understanding of homebuyers’ needs.
3. Rental Earnings
Assets like jewelry, stocks, art, and so on, offer you profits in the future when you actually sell them. On the other hand, rental properties offer you cash flows in the present – today. So, buy a bunch of rental properties, rent them out to tenants, and keep counting your rental cash each month.
That, however, is easier said than done! Having a rental property is like operating a business. The property demands maintenance, taxes, and tenant management – all of which can soon balloon into a huge pain point if you don’t know how to handle them. Even if you do, how are you going to manage all of it, without disrupting your primary work?
That’s where a property manager comes in. They can take over all the responsibilities of rental properties and give you a hassle-free experience renting out your property.
Pro Tip: You can use forced appreciation to increase your rent too.
4. Leverage
Wouldn’t it be fantastic if you could buy two real estate properties at the price of one?
Well, you can! Almost.
As you buy your first rental property, get a loan on it, refinance it when you are able and use that loan money to invest in another propery. Yes, you’ll be paying interest on the loan, but your second property will be appreciating in value during this time.
You can use this strategy to invest in several properties, but make sure that you are able to keep up with the accumulated monthly loan repayments. This is where the rental income will provide a valuable inflow of money.
To find high-ROI rental properties and to learn more ways of building your wealth by investing in real estate, contact Zadegan Group.
