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10 Benefits Of Being A Part Time Single Property Landlord
Despite the glamor associated with owning multiple houses and apartments for rent, don’t be blinded by the fact that if you do not seek a high-flying lifestyle, very often one single family rental property is enough for you to retire on.
This is assuming that you have paid off the mortgage or have significantly cleared the debt. And that you are collecting regular rental at market rates with little vacancies.
2 factors that are not really that tough to achieve as long as you don’t make huge mistakes in this business.
In fact, if you have a chunk of spare cash available and considering where to park that cash in order to grow it, stop thinking about annuities and stocks for a moment and take a serious look at rental property.
Real estate is not the number 1 choice of investment for no reason. The benefits are listed below.
1) Appreciation and wealth accumulation
It is almost a certainty that real estate values rise over time.
And this is not some fancy unsubstantiated claim plucked out from thin air. Just go dig up the historical data of real estate prices and values, and you will certainly see a long term rising trend.
Even if you have really bad luck and managed to acquire one that does not appreciate over time, the rental you have collected over the years go into your home equity.
Boosting your personal networth.
2) Protection from inflation
Getting your money eaten up by inflation is a common sales pitch used by insurance agents these day. Even every sales promoter of any investment product will use inflation as a scare tactic to arouse emotions of prospects.
Yet this is as real as it gets. Surely you have noticed the prices of groceries rising year by year?
The money you have in the bank today won’t be able to buy as much next year.
The beauty of real estate is that inflation pulls up the value of your property too. That is without considering the rise in rental inflation has on rental too.
Property is one of the best ways to hedge yourself against inflation.
3) Recurring income
While appreciation in property value is a nice thing to have, the main goal of most landlords is for the steady stream of monthly income via rental.
Just remember that you probably won’t be able to retire on rental income from a single house if there is still a mortgage on it.
4) Income diversification
Operating just a single rental property allows you to keep your day job while being a part-time landlord.
And since you can use a whole lot of leverage, the odds are that you don’t have to liquidate all your other assets in order to acquire a good rental property.
With multiple sources of income, the risk of personal financial disaster become smaller.
And to be honest, if you do run into some kind of financial catastrophe, the cash flow and/equity in your rental property might just be exactly what is required to get you out of the trenches.
5) Low risk investment
Real estate is not an investment with the lowest risk.
But from the perspective of capital and rewards, it is surely up there with the very best, if not the best.
There will always be a market for rental homes
Real estate will almost always hold their value
They even tend to bounce back after a market tumble
This is probably the most attractive factor that makes real estate so desirable.
You don’t need to have $250,000 in cash in order to buy a $250,000 house.
In all likelihood, you’d only need about $50,000 in cash in order to buy it. This is without considering closing costs.
And in some cases, you will even be able to acquire the property with no money down via creative financing.
What’s more. The rental collection will be used to offset the financing that you are using.
The main reason why such high leverage is available to real estate is because lenders and private investors understand the value of real estate and the low risks involved with it. They are therefore willing to offer high loans and funding to help investors like you buy it.
They are confident there is a low chance of failure. Even if you do fail, selling the property will most certainly help them get their money back.
This can only be due to the low risks with rental real estate.
7) Tax advantages
There are both short term and long term tax advantages for being a landlord.
Don’t ask me why. But governments all over the world seem to grant tax rebates and benefits to property investors and landlords.
However, do take note that tax strategies can vary from location to location. So it is best to have an in-depth chat with your CPA in order to take advantage of tax breaks you qualify for.
8) Part time commitment
Being the landlord of only one property will not take up a huge portion of your time.
You might have heard about the horror stories of pesky tenants who call their landlords every day at every odd hour that you can think of. But those situations are few and far between when you are only concerning yourself with 1 rental home.
You can even pass on the landlording duties to your spouse.
9) Personal development
Sometimes life can get a little mundane when you go through the predicable routine of life.
Getting yourself involved into landlording can motivate you to improve yourself and entice you into meeting new people that makes life interesting.
Trust me when I say that your friends and colleagues will start looking at you in a different light when they realize that you are a landlord managing a rental property yourself.
You could actually climb up the social ladder and enhance your reputation among your peers while commanding more respect.
You will pick up personal skills and might even train yourself into a hardcore handyman.
And ultimately the sense of achievement that comes with being a landlord can be something to feel good about and boast to your friends over a social dinner.