The global real estate rental market reached a size of $2.3 trillion in 2022.
There are various types of assets that you may be interested in as an investor. Real estate has long been one of the best types to invest in. Among real estate, there's a range of options, and you'll find several benefits to investing in rental real estate properties.
For some of the key benefits of investing in rental property, keep reading.
1. Cash Flow
Most people only have one source of income in the form of their day-to-day job. One of the best ways to ensure financial stability, however, is to create more income streams.
Rental properties allow you to do this. With a solid lease agreement, you can establish how much rent you'll receive each month from a property. After any associated expenses, the remaining income serves as profit that you can use however you see fit.
2. Portfolio Diversification
Something that any experienced investor will tell you is that one of the best ways to invest is to diversify your portfolio.
This means investing in various types of assets. Doing so significantly lowers your risk as you won't have everything in one area.
3. Inflation Hedge
Inflation means that over an extended period, your money will have less value. To hedge against inflation, investors put their money into assets that will appreciate with time. As such, these assets will be worth as much (if not more) in the future.
There's always a risk when investing as the value of assets may decrease. The level of risk varies between different assets. For years, real estate has proven to be one of the most secure types of investments people can make.
The demand for real estate is constantly increasing, causing the value to go up. If you decide to sell at some point down the line, you will most likely make a profit. You can also update your rental agreement as the value goes up so that your overall income also increases.
4. Tax Deductions
There's a range of tax benefits that come with real estate investment. You'll generally be able to deduct the costs of owning, managing, and operating a rental property.
In some cases, the income from a rental property will be less than the cost of the expenses. This means the property is "negatively geared." Such an investment loss can reduce the overall tax you'll need to pay, so it's worth discussing this with a tax consultant.
5. Get on the Property Ladder
Getting on the property ladder is a huge step. Not everyone can do it, so if you get the opportunity, it's definitely worth considering.
It's a great way to start earning more income and can help you secure financial stability for the future.
Managing a Rental Property
One of the challenges of owning a rental property is managing it. If you don't have experience in managing a property, you'll struggle to understand how to market it to tenants, what kind of maintenance will be required, what lease agreement options are available, and more.
Home River Group is a property management company that can handle all of this, and more, for those who need it. We can discuss your needs to determine exactly how we can help you. To find out more, click here to contact us and organize a free consultation today.
