Are you wondering what to do with your surplus savings? Putting your capital to work for you in a rental property is a great way to create an income stream and build wealth. Building wealth is a strenuous process and requires a great deal of work on your end, and property is a great route to allow that wealth the accumulate over time. Here are three reasons why you should invest in rental property.
Reason 1 – Create Passive Income
You make money in real estate when you buy the property, not when you sell. With a rental property, the idea is to pay less on your mortgage than you charge in rent. This situation creates “positive cash flow” in the property.
When you’re earning more in rent than you pay on mortgage costs and management expenses, you create “passive income.”
Passive income can change the game you play for moving forward with your time as a renter. Sustained passive income sets you up really well for the future, and can allow for generational wealth to be instilled into your family long term.
Reason 2 – Build Generational Wealth
American real estate in select states and neighborhoods is always appreciating. With the right location, your property grows in value, building generational wealth for your family. As you pay down the mortgage using the tenant’s rent, you get to access the property’s equity. This leverage allows you to invest in more properties and grow your real estate portfolio.
Reason 3 – Build a Business
Investing in rental property is more of a business than an investment. You’re looking to create income more than relying on the appreciation of the asset.
Treating your investment strategy like a business means you need to find the right people. Find an attorney and CPA to help you manage your new rental property business.