Investing in property is one of the oldest and best ways to invest and grow your wealth. When looking at how to increase my money, I often look at well-known wealthy individuals and companies, and I found that almost always, the one common investment they have is in property. Other than a few rare occurrences, the values of property usually go up with time. This makes it an almost sure bet on putting in money. It is no wonder that I am fully sold on the idea of buying property, not to necessarily live in but to rent out.
One of the reasons that I find the idea of owning property to rent is because of the passive income. The earnings that come with it are as easy as I could possibly imagine. As long as there is a tenant, then there is a sure stream of income coming in. And because values of properties rarely go down, there is the security of knowing that I expect a certain amount of money at any one point, whether it’s yearly or monthly. I find this option exceptionally attractive because, compared to selling a product or a service, I do not have to adjust to market conditions and worry about logistics.
Another reason I think being a landlord is a good way to go is because of the ease of management of the investment. Unlike running a business, there is very little to worry about. Things like repairs, painting, plumbing, and service charges are the bulk of the work. Since these options rarely ever change, I know what to expect and what I’m dealing with. It also makes it relatively easy to budget for such things, and I can set aside a known amount of money to cater for such things.
At the same time, property management can be a tedious task if the tenants are problematic. To avoid this, I find that I have to go through a tedious process of vetting my tenants and setting realistic conditions to screen applications for tenancy. These conditions can sometimes be difficult to establish without being prejudicial. At the same time, I have to ensure that I am not so strict that I am constantly losing out on potential clients.
If at any one point a tenant is careless or does some damage to the house, the repairs can be expensive. Even though this kind of damage rarely occurs, when it does, it is often on a large scale and can cost a significant amount of money. It is therefore essential to use good quality products and not compromise on maintenance.
Another challenge I find with being a landlord is in neighborhood degradation. Since owning property is a long term investment, it is not easy to just move from one neighborhood to another. Unfortunately, many areas go through changes and can either improve or not. And since it happens very slowly, one only notices after a long while. Neighborhoods that do not experience this are almost always very expensive to acquire property in them, even with financing.
The benefits, however, outweigh the challenges for me. Not to mention that when I have a property up for rent, I can use it as collateral with my bank to get financing for other investment opportunities. The money I receive from the rent goes into paying off such loans. This eliminates the stress that comes with borrowing. And since people will always need housing, it is almost impossible to not have a tenant. That’s all it takes!