Investing in land is a sound, secure way to build your wealth. If you are choosing to invest in property with LandCentral for rental purposes, there are multiple factors to consider. Owning rental properties is a fantastic investment as long as you have done your due diligence and have researched all the pros and cons. Below are a few topics to help get you started.
The investment goal is that housing should cost no more than 30 percent of your income. As this is becoming increasingly more challenging with today’s market, before investing in a rental property, ensure you are already in a financially stable place to begin.
One option to consider is to get a cosigner or guarantor. Many investors start with a little assistance. A cosigner promises to pay for a loan if you are unable to. Cosigners are beneficial for both the lender and the borrower as it guarantees payment to the lender and allows the borrower (you) to build your investment portfolio. Once the investment is paid off or you are in a place to refinance, your credit will be positively impacted and you will more likely be in a better place to continue to invest on your own with no additional assistance.
When looking at personal property, the three factors to consider are price, quality, and location. When looking at affordable rental properties, you may need to sacrifice one or two of the three factors. Be flexible and look at the larger picture of what your goals are. Compare the risks with the rewards. Some risks include:
- Tenants can be difficult to deal with and depending on the location of the property to where you reside, you might want to consider investing in a property management company to help offset those challenges.
- Rental income may not cover the total mortgage payment. So you need to be sure you are in a financial position that this is not too large a risk.
- Unlike other typical investments like stocks, real estate is all or nothing. If things become to financially straining, you are not able to offload a potion of your investment. In other words, you are in it to win it!
Some of the rewards, on the other hand, include:
- After the initial financial investment, you can earn money almost immediately off the rental. And as your personal income will continue to increase, the rental costs will remain the same, increasing your investment gains.
- Rental income isn’t included as part of your income subject to Social Security tax.
- The interest you pay on an investment property loan is tax-deductible.
- Short of another crisis, real estate values are more stable than the stock market.
So the typical Look Before you Leap mentality is absolutely imperative in determining whether or not you should invest in a rental property. Weigh your options and carefully consider if the rewards outweigh the risks. Once you have decided you are ready to invest, LandCentral is here to help. No realtors, no paperwork, no hassle. LandCentral offers financing for everyone. So although coming to the decision is challenging, once you have committed to investing in property, LandCentral makes the rest easy!