Rental Property Investment
Now is a good time to seriously consider investing in rental property. What matters is for current and would-be investors to understand the current situation and the long-term possibilities. When you know the whats and the whys you can make sound decisions about why investing in rental property is still a good idea.
Let us begin with the basic principles of sound investment:
- Build your profit in on the purchase instead of waiting to make it on the sale.
- Choose your rental property location carefully, so you have a ready market.
- Choose your rental property type to meet your ready market’s needs and wants.
Reasons Why Investing Now is a Good Idea
1. Many Homeowners and Rental Property Owners are Financially Overstretched and Need Rescuing.
Potential rentals will come on the market at attractive prices. Anyone who is out of work, on short time, expecting to lose their job may need to sell, despite lenders are offering support packages to help people struggling to pay their mortgage.
Some investors will have over-stretched themselves, so need to sell one or more properties in their portfolio. Others will want to use a 1031 Exchange to change their current strategy so, because of strict time limits, may need to “relinquish” a property at less than they wanted.
In any event, by buying from a “must-sell” owner builds your future profit into the purchase.
2. Some Sellers Will be Happy to Rent Back.
A homeowner who must sell (they bought a new car last year, have long-term repayment plans on new furniture, etc) may want to stay in “their home.” so, they will be not only ready, willing, and able tenants, but they will care for their home, perhaps better than a new tenant. This gives you, the investor, instant income from a good and reliable tenant.
3. Work From Home (WFH) Trends Offer Opportunities
Because of COVID-19, more people are working from home. They are also trying to put some distance between them and others. This suggests a trend is beginning in renting single family homes instead of an apartment, or renting a larger property with an extra room which can be used as a home office. Savvy rental property investors get in on new trends as soon as they can to give themselves a head start over their competition.
4. Buy the Fixer-Upper
Many investors buy a property in need of renovation or repair. So, instead of buying, holding, and hoping for a good tenant, savvy investors will use this difficult time when the supply of good tenants may be low in a particular area, to renovate their new investment. When it is ready for a tenant (who will pay a higher rent to live in a recently-renovated property) many of the problems our country now faces will either be lessened or over.
5. Tax Write-Offs Are Still With Us
Lost income, repair costs, business expenses which investors may suffer now mean carry-back and carry-forward options are available. Please discuss details with your CPA.
The Takeaway
Good decisions, based on the basics of sound rental property investment mean now is still a good time to focus on rental property investment.