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5 Reasons to Include Rental Property in Your Investment Portfolio

System - Tuesday, February 7, 2023
Property Management Blog

You're ready to start investing in real estate, but where do you begin? If you go out and buy the first property you find, you'll also need to figure out a way to keep it in good condition and protected from vagrants. One way to do so is by turning it into a rental property.

While you may not want to turn an investment into a rental property, there are some benefits that you'll gain. It's not like you're immediately selling over something you've just purchased.

Here are five reasons to add a rental property to your investment portfolio.

1. Source of Passive Income

The main reason people invest in rental properties is for passive income. You retain ownership over a property, but you allow an individual or family to stay there for a price. You can then collect rent every month.

It's the perfect way to ensure that you receive money with relatively little effort on your part.

2. Home Security

In addition to passive income, renting out property also allows you to ensure it stays in good condition. A property left alone may fall victim to squatters or vandalism. Occupants naturally keep other people out and will ideally keep the house clean.

There's also the option of moving into the property in the future, as long as you give the current tenants plenty of warning in advance.

3. Financial Security

Some people take the opportunity to invest in real estate with the intent of selling later on. However, it can be difficult to maintain multiple different properties on your own. A property management company can help, but that's an additional investment.

The solution is to rent the property until you're ready to sell. The passive income helps to afford that management company and maintain the property.

4. Diversification

A rental property is a great way to diversify your assets. Putting too much money into one specific area can lead to problems if that investment depreciates in value.

In particular, the value of real estate will fluctuate every two years or so. The same goes for the stock market, which can rise or fall in a matter of days.

By spreading your wealth over multiple different investments, you give yourself a layer of security against the inherent risk.

5. Tax Benefits

Something to keep in mind is that you can get access to tax benefits as a real estate investor. These can help with various costs such as maintenance repairs and insurance.

Renting out the property also means that you can get tax breaks for self-employment.

Invest in a Rental Property Today

A rental property isn't just a way to house people who need a roof over their heads. It's an investment that will pay you back over time and provide some financial security. The only problem is maintaining multiple rental properties at the same time.

HomeRiver Group can help you with all your property management needs. We'll handle selling, buying, leasing, and more. Contact us to learn how we can help you.