In terms of financially-sound investments, rental properties have long been a viable source of passive income. In fact, investing in real estate has contributed to the wealth of many of the world’s most successful individuals and companies – and the potential to generate significant earnings is unlikely to fade anytime soon. This reality leaves many pondering the question, “are rental homes a good investment?”
Even so, for individual investors, developers, and investment property corporations alike, considering a venture into the rental market often comes with a multitude of questions:
- Are rental homes a good investment?
- What are the benefits of investing in rental properties?
- What is the best way to go about investing in rental properties?
- How do I achieve maximum return on investment (ROI)?
As one of the country’s leading build-to-rent developers (as well as an acclaimed property management company), Wan Bridge has helped a diverse range of investors navigate the decision-making process with confidence. And in our years of experience, we’ve heard – and answered – the questions mentioned above many times over.
So, we’ve created a handy resource for anyone considering rental homes as an investment, explaining how and why the rental market can be such a lucrative opportunity when investors take the right approach.
Benefits of Investing in Rental Property
Every potential investor has a unique set of goals, preferences, and needs. But when it comes to investing in rental properties, the benefits generally make it an attractive option across the board.
Good Cash Flow
Rental properties provide a steady and reliable cash flow without the dramatic ebb and flow that many other investments often have. Every month, an infusion of cash will be headed your way – and it requires virtually no effort on your part, as long as you’ve selected a hands-off property management approach.
The passive income generated by rental properties is easily one of the biggest benefits of this type of investment. Once you’ve secured your rental home investment, the money simply continues to flow in.
Value Appreciation
Even with shifts in the economy, real estate property values appreciate over time. This means that, even though there may be an occasional period of economic recession, the price of properties generally increases in the “big picture.”
As a result, rental properties can be a superb long-term investment that presents little financial risk over an extended period of time.
You’re In Charge
Many other forms of investment, such as the stock market, put another person in charge of your money. Because of the complexities of those investments, you’ll typically need to hire (and pay for) a professional to manage your portfolio and funds.
However, investing in rental properties is a move you can make on your own. It’s entirely up to you to select the type of property you want to invest in, whether you want to partner with a professional developer or go it alone, and the location of your investment properties. So, it makes it easier to align your investment with your specific goals and needs rather than putting the task in someone else’s hands.
What You Should Know Before Investing in Rental Properties
There’s no question that the benefits of investing in rental properties generally outweigh any potential drawbacks. However, it’s vital that you are making an informed decision – just like any other investment, rental properties will have a far higher success rate when you know what you’re getting into.
Here are a few things to consider before moving forward.
Can You Manage a Property?
Many first-time investors in the rental market decide to purchase a single property and then operate it as the owner and landlord. At first glance, it seems like this would be the simplest way to enter the market.
Unfortunately, it’s very easy to underestimate the amount of effort involved in managing a rental property. As a landlord, you’ll need to be prepared to deal with all home maintenance and repairs, manage tenants’ needs, collect payments and deposits, and more. Additionally, issues with tenants fall on your shoulders – if a tenant refuses to pay rent, damages the property, or abandons the contract, it’s your problem to tackle.
In some cases, landlords decide to hire a property management company to handle all day-to-day operations. Keep in mind that not all property management teams are created equally, so you’ll need to find one with the experience needed to do a good job.
Know Your Location
Geographical location is one of the biggest factors in determining the profitability of your investment in a rental property. The average rent can vary dramatically from one city to the next, and sometimes, it can change unexpectedly.
Professional developers invest in a considerable amount of research and analysis to pinpoint the best areas for rentals, determining where a community will achieve long-term success. Property taxes, local schools, amenities, regional job markets, crime rates, and other characteristics of a specific area all play a part in the return on investment for rental investors.
No Fixer-Uppers
We’ve all heard horror stories of fixer-uppers gone wrong, but many first-time investors make the mistake of buying a cheap property that turns into a money pit – sometimes, a deal really is too good to be true.
Some experienced investors may be able to turn a profit with fixer-upper homes, but it usually involves a lot of work, upfront expense, and time. Instead, it’s usually a safer option to choose a well-constructed, ready-to-rent property (or community). In that scenario, you reduce the risk of unexpected expenses and delays while also setting yourself up for a faster return on your initial rental home investment.
For example, Wan Bridge is unique from other developers in that we focus on quality construction, thoughtful design, and high-end finishes right from the start. As a result, our homes are the ideal match for discerning tenants that are prepared to pay a higher rent in return for excellent home quality and community amenities – and investors reap the benefits as well.
Partner with Wan Bridge and Invest in the Future of Real Estate
As a growing number of people opt to rent rather than buy, the market is experiencing a significant shift – and it’s completely changing the way investors and developers look towards the future. The benefits of renting a home, particularly a high-end, built-to-rent property in a master-planned community, have quickly outpaced many of the perks of homeownership. People choose convenience, flexibility, and amenities, and Wan Bridge is proving to be the developer of choice.
Wan Bridge sets a new standard in the build-to-rent industry, taking an innovative approach to creating exceptionally high-quality homes and rental communities in Texas and beyond. Rather than simply developing and constructing our BTR properties, we go one step further to ensure success: Wan Bridge also serves as the professional property management team for all of our communities. This benefits residents and investors alike, creating a smarter solution that truly offers it all.
If you’re considering an investment in the rental market, why not partner with a developer that already has a proven track record for success? Wan Bridge has excellent relationships with many Texas property owners, financial institutions, construction firms, building suppliers, and more – and our door is always open to new partnerships. For more information about how you can make a savvy investment in real estate and rental properties, connect with the Wan Bridge team today.
Image Source: Kanjana Kawfang / Shutterstock
