Buying Property for Rental Income – No Better Investment
Rental Income Property Investment
Is there any investment opportunity that could beat income generating real estate in 2022 or for the next 5 years? Is the stock market correction making you look for other options?
Check out the best cities to invest in real estate and read this post below on rental income.
With your initial financing concerns aside, rental properties can offer a high, continuous extra income to help pay off your mortgage, meet repairs, and add confidence to your investment decision. If the work concerns you, consider using rental property management software to help out.
Cynics might point to cash flow issues, paperwork overload, and big unseen repairs as key reasons to be way of rental properties. You’ve seen those issues on TV shows, yet the buyers always seem to handle them an make a big profit. If your plan is to retire happy in Costa Rica or Mexico, this is probably the best way to make that happen.
If you’re concerned with a potential housing crash ahead, the market stats don’t support that notion and it looks good to 2023. Review the Los Angeles Housing market forecast, San Francisco market forecast, and the New York market forecast for predictions and commentary. Contrast that with the Calgary Housing Forecast.
Another promising area to investigate is foreign student housing in Vancouver and other high demand cities. Vancouver BC is very attractive to students from China, Hong Kong, Indonesia, Singapore, Dubai, Germany and other counties where wealthy families want to have their kids educated.
They find Vancouver safer and more relevant. CIBT is one company to watch with their huge portfolio of properties in Greater Vancouver, Canada.
Factors that Support Investing in Income Rentals
There’s a housing market crisis across North America and demand for rental apartments, condos and houses will stay high. It’s unlikely that a quick solution will happen to generate housing for everyone. This land development held up by legislation, it’s a sure bet that rental property is going to be a hot investment sector.
Here’s 11 Reasons You Should Take Rental Income Investing Seriously:
- growing number of Millennials entering their family starting and home buying years
- mortgage rates not forecast to rise much
- rental prices can stay high because employment is good and renters have no options
- stories of renters destroying the place almost never happen (renter screening process)
- you can deduct mortgage interest and real estate taxes on rental properties
- you can write off utilities, insurance, repairs and maintenance, yard care, association fees
- write off upgrades such as decks, pools, tankless water heaters, and even landscaping
- write off depreciation of assets/home
- write off solar power generation unit
- the income won’t become taxable until you run out of upgrades/repair costs
- the renters will have to cover any cost of living or mortgage rate growth
That’s quite a compelling list of reasons why buying a rental property makes incredible sense. And if you live in the unit, then you’ve got your cake and you’re eating it too. So far from being a risky investment, rental income properties have built-n safety and tax features that make them a no brainer. All you have to do is find financing.
Here’s how to calculate the numbers on a rental income property such as cash flow, capital expenditures and all the rest.
What is a typical Return on Residential Rental Property?
I revealed in my previous post on rental property investment a return of 30 to 40%. On a common million dollar home in San Diego, Los Angeles, San Francisco, New York, Vancouver or Toronto, that’s 300-400 thousand dollars. I’ve seen homes in my neighborhood rent out fast at $5000 to $7000 a month.
Rental Income Property Calculator
Try the calculators from Rental Property Reporter or from Financialmentor.com.
Top Tips for Buying the Right Rental Property for You
- decide which city has the best potential for rent prices and purchase price
- decide what kind of property will work for you
- decide whether you’ll be living in the property
- determine how much capital you have to work with and how much you can sink into improvements
- don’t buy a fixer upper
- buy a home with the best likelihood of being rented:
- buy a home in a lower price range to begin with (first time investor)
- consider a property management firm that can handle maintenance and renter screening
Here’s some further resources to get you on your way to finding the perfect property: