Are you about to purchase a new home? Want to just sell your old home? What if we told you you could have another source of income and have consistent cash flow, if you kept your old home and rented it out? If you’re still not convinced, here are 5 reasons why you should consider becoming a landlord.
GENERATE CASH FLOW
Who wouldn’t like making some extra money? And not only are you making extra money, but it’s consistent every month. Real estate will always be a good investment for your income portfolio and will never die out. People will always need a place to live, and having multiple sources of income is something that the rich and wealthy do to get ahead and make more!
RENTING OUT YOUR HOME IS A GOOD EXPERIENCE
When you are managing a property, there are different people that you communicate with often, such as your property manager (if you have one), your accountant, the electrician, etc. This experience may lead to you starting a property management business, or maybe the money you make from it will lead to you investing in something else, or maybe you’re able to transfer these skills to managing your own home better, and so much more. Experiencing different things and exploring other income sources will make you a more well-rounded individual, even if you go into it and figure out later on that being a landlord is not for you.
QUALIFY FOR TAX DEDUCTIONS
That’s right, it also comes with some tax benefits! This makes having an accountant on your side more important. There are things you can write off as a deduction and other losses that you had that you can offset through your taxes. Make sure to talk to your accountant about all the details.
IT WILL HELP YOU PAY DOWN ON YOUR MORTGAGE
Hopefully since you already owned the property, you probably had a good amount of your mortgage paid off, or maybe the mortgage on your old home is paid off and you want to put it towards your new mortgage, but regardless, the cash flow from your rental property can go towards your mortgage. What you can also do, is price the property based on your mortgage (if it makes sense.) For example, if the mortgage on your new home is 1,500, consider pricing the rental home at 1,500 or slightly higher, based on if you want to just break even or make profit. Also consider saving some of your profit in case there is a repair you need to do on the property or have an emergency.
PROVIDES YOU WITH A SECURITY BLANKET
When COVID-19 first hit and jobs were laying off employees that had worked for them for years, we were reminded how quickly you can get let go from your position, and how expendable you are to companies. This is why it is important to have a security blanket, or a back up plan. Granted, people were allowed to miss out on rent during COVID-19, which made it a special case, but in most cases, your investment property can still bring in some more cash. Maybe if you wanted a little more, do an airbnb on the guest room of your new house, put an ADU in the backyard of your rental home to airbnb that, or maybe your 1 property is bringing in enough revenue to sustain you temporarily until you figure out the game plan. Regardless of your situation, having a back up plan is essential to ensure that you are always okay financially.
By no means are we saying that being a landlord is easy. Just like everything else, it comes with its pros and cons, and ups and downs, but it’s worth it. At the end of the day, you’re making money that you wouldn’t have otherwise, and it is an investment that you can depend on.