Rental Real Estate Is A Sound Investment

This article comes from https://www.forbes.com/ and it talks about some of the reasons Rental Real Estate is good on about any market.

"Real estate, particularly rental real estate, responds quite differently to inflationary trends, as a rule. There are few more labor- and material-intensive products than a new home. Building a home when labor and materials prices are rising becomes more expensive, so the prices of new homes rise. This usually drives many buyers out of the market, but they still need a place to live. They will rent, so rents can rise from higher demand."

Prices on existing homes went up 9% in Cuyahoga county in Cleveland Ohio. That is showing a high demand on affordable homes. The key is labor in building cost and that also includes getting your home remodeled to a home owners perfection. Those prices have went up also and buying a fixer upper can be expensive without the right people around you. 

"Another effect of higher new home prices is the pushing of buyers toward existing homes. Higher demand for existing homes will create upward pressure on prices, and more buyers will leave the market and rent. The values of the rental homes rise, so the investor-owners enjoy higher equity. They also can often raise rents to increase their cash flow."

This is also true if your home is placed in the areas where home buyers are purchasing their properties. A lot of investors look at an area as a whole when it comes to news reports. The key difference is where are these buyers buying their homes and can you get a home to lease in those areas. If you do then your returns and tenant retention will be higher.  I just finished a new update video on home we have recently purchased for our clients and leased. 

"Rental real estate responds differently to rising interest rates, too. When rates rise, it does put a bit of a damper on buying more rental homes, as it becomes more difficult to realize adequate cash flow when mortgage payments rise. However, the homes already owned by rental investors will be financed by long-term fixed-rate mortgages, so they will see no difference in their mortgage payment or cash flow. Rental investors just sit back and collect their rent checks and deposit their profits."

Prices vary with the interest rate hikes and so will your profit. I purchased rental properties when the interest rates where 8% and did very well with them in the mid 1980's. The real estate market will react to interest rate hike, but I don't see to many rate hikes this year. Of course if you already have a property with lower interest rates then that will make your property more valuable in many ways. 

Either way most investors are using their cash or IRA's more than banks and pay themselves back their own money with interest. Basically they are keeping all the profit in their pockets by being the bank, buyer(Equity) and landlord. Keeping all the streams of income in your pocket can make a huge difference for your future and current income. 

Need to know more of where to purchase homes in the Northern Ohio area and Phoenix Az area? Call me I'm Brett 216-703-5740 EXP Realty Ohio and 602-363-6551 EXP Realty Arizona

Get more information on our Income Real Estate  

Name:

Email:

We respect your email privacy

Powered by AWeber Email Marketing

-->