Should You Invest In Rental Properties Today?August 20, 2018 April 18, 2021 /
Benefits of investing in rental properties include:
- Cash flow
- Ability to build equity
These are just a few. If you decide to invest in rental properties, you’ll become familiar with the above list and more.
Generally speaking, real estate also receives favorable tax treatment when compared to other assets or types of income. In addition, investing in positive cash flowing rental properties often provides a hedge against inflation as rents usually increase over time.
In my opinion, and proven by many others, the ability to use leverage makes investing in rental properties the fastest way to build wealth and reach Financial Independence. A dollar invested in quality cash flowing real estate will typically earn more than a dollar invested in a low-cost index fund.
When you begin to invest in rental properties, consider house hacking
The concept of house hacking should also be considered. It provides two great benefits for those looking to achieve Financial Independence.
First, house hacking provides a low-risk way to explore investing in rental properties since the property will serve as both a primary residence and an investment, with rent payments covering most or all expenses.
Second, housing is one of “The Big Three” household expenses. It is typically the largest monthly expense in any budget as the average American spends roughly a third of their income on a place to live. House hacking will either reduce or eliminate entirely the cost of housing. Being able to save and invest more will abbreviate the time to achieve Financial Independence.
Focus on investing for cash flow. Appreciation should be viewed as the cherry on top of a great rental property. Do not invest for appreciation. Appreciation is speculation and appreciation is not guaranteed.
Fiology thanks Drew of Guy on Fire, a FI community residential real estate expert, for shaping this lesson. He invests in rental properties for a rapid route to Financial Independence. Drew is 28 years old and at the time of this article, owns several rental units with a plan to become Financially Independent in under two years.
- STOCKS VS. REAL ESTATE? A CASE FOR REAL ESTATE by David of thesouthernstache.com
- How to Win in Real Estate No Matter the Market—Up, Flat, or Down by Scott Trench of biggerpockets.com
- How to Run the Numbers For Rental Properties – Back-of-the-Envelope Analysis by Chad Carson of coachcarson.com
- Buy One Property a Year and Retire Early? by Peter of passiveincomemd.com
- BiggerPockets Money Podcast 09: Financial Independence at Age 30 (by House Hacking + Side Hustles) with Drew from Guy On Fire by Drew of guyonfire.us
- What Makes a Good Rental Property – Episode 027 by Matt of pournotpoor.com
- Educate yourself on the basics of investing in cash flow real estate or house hacking. Attend local real estate investing meetups to meet other investors. Find a mentor and don’t be afraid to take action.
- BiggerPockets.com This is the best online community regarding real estate of all types. If you are interested in Real Estate, consider making BiggerPockets.com a favorite in your browser.
- REAL ESTATE INVESTING FOR BEGINNERS by Rich on Money and Thomas Minter of millennialmoney.com
- Is Rental Real Estate a Good Investment? A Real Life Case Study by Juan of financeclever.com
- What is House Hacking? by Drew of guyonfire.us
- Five I.D.E.A.L. Benefits of Real Estate Investing by Chad Carson of coachcarson.com
“Now, one thing I tell everyone is learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values, and the least risks.” – Armstrong Williams